Mr. Trump’s financial ties with Deutsche Bank are the subject of investigations by two congressional committees and the New York attorney general. Investigators hope to use Deutsche Bank as a window into Mr. Trump’s personal and business finances.
Deutsche Bank officials have quietly argued to regulators, lawmakers and journalists that Mr. Trump was not a priority for the bank or its senior leaders and that the lending was the work of a single, obscure division. But interviews with more than 20 current and former Deutsche Bank executives and board members, most of them with direct knowledge of the Trump relationship, contradict the bank’s narrative.
Over nearly two decades, Deutsche Bank’s leaders repeatedly saw red flags surrounding Mr. Trump. There was a disastrous bond sale, a promised loan that relied on a banker’s forged signature, wild exaggerations of Mr. Trump’s wealth, even a claim of an act of God.
But Deutsche Bank had a ravenous appetite for risk and limited concern about its clients’ reputations. Time after time, with the support of two different chief executives, the bank handed money — a total of well over $2 billion — to a man whom nearly all other banks had deemed untouchable.
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In the late 1990s, Deutsche Bank, which is based in Germany, was trying to make a name for itself on Wall Street. Its investment-banking division went on a hiring binge.
The bank recruited a handful of Goldman Sachs traders to lead a push into commercial real estate. One was Justin Kennedy, the son of Supreme Court Justice Anthony Kennedy. Another was Mike Offit, whose father was the writer Sidney Offit.
NYT
I'm still betting Justice Kennedy stepped down from the Supreme Court to avoid something ugly becoming public.
At Deutsche Bank, Mr. Offit’s mandate was to lend money to big real estate developers, package the loans into securities and sell the resulting bonds to investors. He said in an interview that one way to stand out in a crowded market was to make loans that his rivals considered too risky.
In 1998, a broker contacted him to see if he would consider lending to a Wall Street pariah: Mr. Trump, who was then a casino magnate whose bankruptcies had cost banks hundreds of millions of dollars.
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He was looking for a $125 million loan to pay for gut renovations of 40 Wall Street, his Art Deco tower in Lower Manhattan. Mr. Offit was impressed by the pitch, and the loan sailed through Deutsche Bank’s approval process.
Mr. Trump seemed giddy with gratitude, Mr. Offit recalled. He took Mr. Offit golfing. He flew him by helicopter to Atlantic City for boxing matches. He wrote a grateful note to Sidney Offit for having “a great son!”
Yeah, yeah. I know. Fake News!
Mr. Trump soon came looking for $300 million for the construction of a skyscraper across from the United Nations headquarters. The loan was approved. He wanted hundreds of millions more for his Trump Marina casino in Atlantic City. Mr. Offit pledged to line up cash for that, too.
Not long after, Edson Mitchell, a top bank executive, discovered that the signature of the credit officer who had approved the Trump Marina deal had been forged, Mr. Offit said. (The loan never went through.)
Mr. Offit was fired months later. He said it was because Mr. Mitchell considered him reckless, though he denied wrongdoing.
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Over the next few years, the commercial real estate group, with Mr. Kennedy now in a senior role, kept lending to Mr. Trump, including to buy the General Motors building in Manhattan. Occasionally, Justice Kennedy stopped by Deutsche Bank’s offices to say hello to the team, executives recalled.
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In 2003, a Deutsche Bank team led by Richard Byrne — a former casino-industry analyst who had known Mr. Trump since the 1980s — was hired to sell bonds on behalf of Trump Hotels & Casino Resorts.
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A year later, in 2004, Trump Hotels & Casino Resorts defaulted on the bonds. Deutsche Bank’s clients suffered steep losses. This arm of the investment-banking division stopped doing business with Mr. Trump.
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Around that time, Mr. Trump returned to Deutsche Bank’s commercial real estate unit — which was housed in a separate part of the sprawling investment-banking division — for another loan. This one was to build a 92-story skyscraper in Chicago, the Trump International Hotel and Tower.
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A Chicago skyscraper was the focus of a court battle between Mr. Trump and Deutsche Bank that equated the 2008 financial crisis with an act of God.
As Deutsche Bank considered making the loan, Mr. Trump wooed bankers with flights on his private plane, according to a person familiar with the pitch. In a Trump Tower meeting, he told Mr. Kennedy that his daughter Ivanka would be in charge of the Chicago project, a sign of the family’s commitment to its success.
But there were warning signs.
Mr. Trump told Deutsche Bank his net worth was about $3 billion, but when bank employees reviewed his finances, they concluded he was worth about $788 million, according to documents produced during a lawsuit Mr. Trump brought against the former New York Times journalist Timothy O’Brien. And a senior investment-banking executive said in an interview that he and others cautioned that Mr. Trump should be avoided because he had worked with people in the construction industry connected to organized crime.
Nonetheless, Deutsche Bank agreed in 2005 to lend Mr. Trump more than $500 million for the project. He personally guaranteed $40 million of it, meaning the bank could come after his personal assets if he defaulted.
By 2008, the riverside skyscraper, one of the tallest in America, was mostly built. But with the economy sagging, Mr. Trump struggled to sell hundreds of condominium units. The bulk of the loan was due that November.
Then the financial crisis hit, and Mr. Trump’s lawyers sensed an opportunity.
A provision in the loan let Mr. Trump partially off the hook in the event of a “force majeure,” essentially an act of God, like a natural disaster. The former Federal Reserve chairman Alan Greenspan had called the financial crisis a tsunami. And what was a tsunami if not a natural disaster?
And the financial crisis was an act of greedy sons of bitches.
One of Mr. Trump’s lawyers, Steven Schlesinger, told him the provision could be used against Deutsche Bank.
“It’s brilliant!” Mr. Schlesinger recalled Mr. Trump responding.
Yeah, brilliant. About par for Trump and Trump attorneys.
Days before the loan was due, Mr. Trump sued Deutsche Bank, citing the force majeure language and seeking $3 billion in damages. Deutsche Bank countersued and demanded payment of the $40 million that Mr. Trump had personally guaranteed.
With the suits in court, senior investment-banking executives severed ties with Mr. Trump.
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In 2010, Deutsche Bank and Mr. Trump settled their litigation over the Chicago loan. Mr. Trump agreed to repay most of what he owed by 2012.
Some years too late.
Jared Kushner introduced his father-in-law, Donald J. Trump, to Rosemary Vrablic, [a private banker working for Deutsche].
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Mr. Trump flew Ms. Vrablic to Miami to show her a property he wanted to buy: the Doral Golf Resort and Spa. He needed more than $100 million for the 72-hole property.
Deutsche Bank dispatched a team to Trump Tower to inspect Mr. Trump’s personal and corporate financial records. The bankers determined he was overvaluing some of his real estate assets by as much as 70 percent, according to two former executives.
By then, though, Mr. Trump had become a reality-TV star, and he was swimming in cash from “The Apprentice.” Deutsche Bank officials also were impressed that Mr. Trump did not have much debt, according to people who reviewed his finances. Aside from his history of defaults, he was an attractive borrower.
"Aside from his history of defaults, he was an attractive borrower." That's on a par with Judge Ellis saying about Paul Manafort at his sentencing that Manafort "led an otherwise blameless life."
Mr. Trump also expressed interest in another loan from the private-banking division: $48 million for the same Chicago property that had provoked the two-year court fight.
Mr. Trump told the bank he would use that loan to repay what he still owed the investment-banking division, the two former executives said. Even by Wall Street standards, borrowing money from one part of a bank to pay off a loan from another was an extraordinary act of financial chutzpah.
I'm pretty sure that if I tried that, I'd go to jail.
Because these would be the private bank’s first transactions with Mr. Trump, they needed approval up the chain of command.
Investment-banking executives, including Anshu Jain, who would soon become Deutsche Bank’s co-chief executive, pushed back. Lending to Mr. Trump again would be foolish, they argued, and signal to clients that they could default and even sue the bank.
Executives in the private bank countered that the proposed loans had Mr. Trump’s personal guarantee and therefore were low risk. And the Chicago loan, they noted, would lead to the repayment of tens of millions of dollars that Mr. Trump still owed the investment-banking division.
A top executive with responsibility for the private bank discussed the loans with Mr. Ackermann, the chief executive, who supported them, according to two officials. A powerful committee in Frankfurt, which evaluated loans based on risks to the bank’s reputation, signed off.
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Deutsche Bank lent money to Donald Trump Jr. for a South Carolina manufacturing venture that would soon go bankrupt.
Like father, like son. I don't think they were ever really trying to make any business successful. They were just laundering money through them, taking money out and putting it in their pockets.
It provided a $15 million credit line to Mr. Kushner and his mother, according to financial documents reviewed by The Times. The bank previously had an informal ban on business with the Kushners because Jared’s father, Charles, was a felon.
Yeah, and Deutsche has been involved in money laundering itself.
In early 2014, Mr. Trump and his personal lawyer, Michael Cohen, approached Ms. Vrablic about more potential loans.
The owner of the Buffalo Bills had died, and the N.F.L. franchise was up for sale. Mr. Trump was interested, and he needed to show the league he had the financial wherewithal to pull off a transaction that could top $1 billion.
Mr. Trump asked Ms. Vrablic if the bank would be willing to make a loan and handed over bare-bones financial statements that estimated his net worth at $8.7 billion.
Mr. Cohen testified to Congress last month that the documents exaggerated Mr. Trump’s wealth. Deutsche Bank executives had reached a similar conclusion. They nonetheless agreed to vouch for Mr. Trump’s bid, according to an executive involved.
Nothing suspicious here, folks. Normal banking business.
Mr. Trump’s bid did not win, but another lending opportunity soon arose.
A federal agency had selected Mr. Trump to transform the Old Post Office Building in Washington into a luxury hotel. But his financial partner — the private equity firm Colony Capital, run by Thomas J. Barrack Jr. — pulled out. Mr. Trump needed nearly $200 million.
Anshu Jain argued against lending to Mr. Trump when Mr. Jain was part of Deutsche Bank’s investment-banking division. But that changed when he became the bank’s co-chief executive.
Hmmm. Nothing suspicious there, either.
Because of his decades-long pattern of defaults and his increasingly polarizing political rhetoric — among other things, he had been spreading a lie about President Barack Obama being born overseas — Mr. Trump remained untouchable for most banks.
Ms. Vrablic was willing to help.
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This time, there was less internal opposition. One reason: Mr. Jain — by then the bank’s co-chief executive — had a solid relationship with Ms. Vrablic.
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A $170 million loan to pay for the overhaul of the Old Post Office went through in 2015.
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On Aug. 6, 2015, Mr. Trump [signed] documents for another loan from Deutsche Bank: $19 million for the Doral resort. That brought to more than $300 million the total lent under Ms. Vrablic.
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In early 2016, Mr. Trump asked Ms. Vrablic for one final loan, for his golf course in Turnberry, Scotland.
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Ms. Vrablic said yes, but a fight soon erupted.
Jacques Brand, who was in charge of Deutsche Bank’s American businesses, angrily objected, partly because of Mr. Trump’s divisive rhetoric.
Ms. Vrablic appealed the decision. Senior executives in Frankfurt, including Christian Sewing, who would become chief executive in 2018, were shocked that the private bank would consider lending Mr. Trump money during the [presidential] campaign, bank officials said.
The bank’s reputational risk committee killed the transaction in March 2016.
That same month, as The Times was preparing an article about Mr. Trump’s excommunication from Wall Street, he cited his warm relationship with Deutsche Bank.
“They are totally happy with me,” he said to The Times. “Why don’t you call the head of Deutsche Bank? Her name is Rosemary Vrablic. She is the boss.”
Do you suppose he really believed she was the head of Deutsche?
A report prepared by the board’s integrity committee concluded that executives in the private-banking division were so determined to win business from big-name clients that they had ignored Mr. Trump’s reputation for demagogy and defaults, according to a person who read the report.
The review also found that Deutsche Bank had produced a number of “exposure reports” that flagged the growing business with Mr. Trump, but that they had not been adequately reviewed by senior executives.
On Deutsche Bank’s trading floor, managers began warning employees not to use the word “Trump” in communications with people outside the bank. Salesmen who violated the edict were scolded by compliance officers who said the bank feared stoking public interest in its ties to the new president.
And they're in it up to their eyeballs now.
One reason: If Mr. Trump were to default on his loans, Deutsche Bank would have to choose between seizing his assets or cutting him a lucrative break — a situation the bank would rather resolve in private.
Two years after Mr. Trump was sworn in, Democrats took control of the House of Representatives. The chamber’s financial services and intelligence committees opened investigations into Deutsche Bank’s relationship with Mr. Trump. Those inquiries, as well as the New York attorney general’s investigation, come at a perilous time for Deutsche Bank, which is negotiating to merge with another large German lender.
Next month, Deutsche Bank is likely to start handing over extensive internal documents and communications about Mr. Trump to the congressional committees, according to people briefed on the process.
And the New York state attorney general is right behind them.
