Will Trump’s Conflict With Deutsche Bank Bring Down His Presidency?

Donald Trump’s more than $300 million debt to Deutsche Bank may be the most serious conflict of interest he faces once he is sworn in as president on Jan. 20.

Donald Trump’s potential conflicts of interest have continued to pile up since he was elected president.

Considering the sprawling nature of all his properties and investments in the United States and around the globe, Trump is heading to the White House fraught with a multitude of business-related pitfalls.

But in one notable case it isn’t about what Trump owns, but rather what he owes and who he owes it to.

According to Mother Jones, Trump accumulated $364 million in debt from Deutsche Bank to finance three of his prized properties: the Miami Doral National golf course; Trump International Hotel and Tower in Chicago; and the much-hyped Trump International Hotel in Washington, D.C., just a few blocks from the White House.

Trump’s relationship with the German financial firm goes back to nearly two decades. According to the Wall Street Journal, Deutsche Bank was the only firm that was willing to lend to the real estate mogul in the late 1990s, as Wall Street banks had soured on him because of his several bankruptcies.  

The bank has since been involved in “loans of at least $2.5 billion” to companies associated with him. This is not including another $1 billion in loan commitments that Deutsche Bank has made to other Trump-affiliated entities.

Trump is certainly not new to debt as he himself once told CNN, “I am the king of debt.”

And he wasn’t kidding because his organization once owed up to $3.5 billion in the early 1990s, nearly $1 billion of which he was personally liable for, according to the Wall Street Journal.

But a lot of things have changed since then.

Donald Trump has been elected president and Deutsche Bank is in severe financial trouble. In fact, the German financial firm’s stock has fallen to the extent that the German government is considering stepping in to bail out the bank, making it a part owner of the institution.

According to Bloomberg, things are  further complicated by the Justice Department imposing a staggering $14 billion fine as part of a settlement with the German bank for fraudulent business practices leading up to financial crisis in 2008.

A foreign entity holding so much of Trump's debt has raised alarms among ethics watchdogs, as it presents financial leverage that could affect the decision-making of the incoming president.

Norm Eisen, a former special counsel for ethics in President Barack Obama’s administration, told Mother Jones that Trump’s case is unprecedented as no president has taken office with such an enormous amount of debt to an organization that is in the midst of negotiating a settlement with the government.

"The conflict is so blatant," he said.  

It is a unique problem when it comes to conflicts of interest. And it begs the obvious question: If Trump finds himself in the position of choosing between United States interests and his creditors' interests, who will he side with?

Trevor Potter, a former Federal Election Commission chairman and general counsel of George H.W. Bush and Sen. John McCain, reflected the same sentiment when he spoke to The Washington Post.

“It’s unthinkable in recent history,” Potter said. “There’s the possibility of a president being able to affect his own personal financial interests, conceivably to the detriment of the general public.”

deutsche bank

Deutsche Bank has already stated that it is only willing to pay up to $3 billion of the $14 billion fine. With Trump owing more than $300 million, it’s almost certain that the bank will use that as leverage to reduce the fine.

Given Trump’s devotion to his own self-interest, he will likely seize the opportunity to wipe off his own debt in favor of reducing the fine. It costs him nothing personally, and his long-time lending partner will owe him for his largesse.

Contrarily, if Trump is the steely negotiator that he claims to be, he could threaten a greater fine in exchange for better loan terms from the bank.

The problem is that it can go both ways, and what’s worse is that none of this would be transparent.

Trump has looked to mitigate the burgeoning conflict of interest issue by promising to step down from his business and personally divest from all his holdings, leaving his children to run the Trump Organization.

But as Jesse Eisinger, a senior reporter for ProPublica, noted in an interview with NPR:

“That's not a solution at all because Deutsche Bank could seek to curry favor with his children, which would benefit them and also benefit Trump as well,” he said. “This is going to be an ongoing problem that is virtually unsolvable.”

But because the Trump Organization’s main export is the Trump brand, anything short of a full divestiture and a promise never to get back into the business, will not be enough to alleviate all the conflicts of interest.

There will always be incentives for people to license the brand to curry favor with Trump both financially and to curry favor with the president of the United States. In many ways, the problem is next to impossible to solve because the Trump family will under no circumstances give up the business.

Even though the Republicans have a majority in both houses of Congress it’ll be their job to remain vigilant about how their president handles the intricate web of conflicts of interest. Democrats will have to play their own role in keeping the Republicans honest.

At any point after the inauguration, one wrong move by the Trump Organization and the president could lead to potentially impeachable offenses, sliding the country into another political mess. 

Banner Photo: Reuters

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