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Saturday, 07/22/2017 4:40:37 PM

Saturday, July 22, 2017 4:40:37 PM

Post# of 447598
Herr Mueller is now investigating Trump's Deutsche Bank transactions, another fishing trip.

Banking regulators are reviewing hundreds of millions of dollars in loans made to Mr. Trump’s businesses through Deutsche Bank’s private wealth management unit, which caters to an ultra-rich clientele, according to three people briefed on the review who were not authorized to speak publicly. The regulators want to know if the loans might expose the bank to heightened risks.

Separately, Deutsche Bank has been in contact with federal investigators about the Trump accounts, according to two people briefed on the matter. And the bank is expecting to eventually have to provide information to Robert S. Mueller III, the special counsel overseeing the federal investigation into the Trump campaign’s ties to Russia.

Deutsche Bank has also lent money to Jared Kushner, the president’s son-in-law, and senior adviser, and to his family real estate business.

Although Deutsche Bank recently landed in legal trouble for laundering money for Russian entities — paying more than $600 million in penalties to New York and British regulators — there is no indication of a Russian connection to Mr. Trump’s loans or accounts at Deutsche Bank, people briefed on the matter said. The bank, which declined to comment, scrutinizes its accounts for problematic ties as part of so-called “know your customer” banking rules and other requirements.

And with one of its most famous clients headed to the White House, the bank designed a plan for overseeing the accounts of Mr. Trump and Mr. Kushner and presented it to regulators at the New York State Department of Financial Services early this year. The plan essentially called for monitoring the accounts for red flags such as exceptionally favorable loan terms or unusual partners.

Additionally, the New York regulators recently requested information related to the hundreds of millions in loans Deutsche Bank’s private wealth management division provided Mr. Trump, one of the people said, paying particular attention to personal guarantees he made to obtain the loans. Those guarantees have declined as the loans were paid down and the property values increased, but it remains a source of interest to the regulators.

While there is no formal investigation of the bank — and personal guarantees are often required when people receive big loans from their wealth managers — the New York regulators have questioned whether the guarantee could create problems for Deutsche Bank should Mr. Trump fail to pay his debts. To collect, the bank would either have to sue the president, or risk being seen as cutting him a special deal.

It is not a hypothetical concern: Mr. Trump sued the bank in 2008 to delay paying back an earlier loan.

Trump needed $300 million to build Trump World Tower near the United Nations. But he required a construction loan, which, at the time, Deutsche did not have the right staff to manage. Determined to get the deal nonetheless, Mr. Offit found another German bank to make the loan with the commitment that Deutsche Bank would take possession once the building was constructed.

But as the deal was being finalized, the other German bank had second thoughts because of worries of a labor strike. Just as the deal seemed to be falling apart, Mr. Trump produced a signed commitment from all the major construction unions promising not to strike.

“We were all amazed he managed to get that,” said Mr. Offit, who retired from the bank in 1999.

In the mid 2000s, Mr. Trump was in need of another construction loan. But this time, the loan — up to $640 million to build Trump International Hotel and Tower in Chicago — did not go as well.

A few years after the project began, the 2008 financial crisis upended the global economy and Mr. Trump fell behind on loan payments. According to a person briefed on the deal, Deutsche Bank was discussing a possible extension, when Mr. Trump sued it to avoid paying $40 million that he had personally guaranteed.

His argument, as detailed in a letter to the bank, was novel: “Deutsche Bank is one of the banks primarily responsible for the economic dysfunction we are currently facing,” Mr. Trump wrote.

With the help of a lawyer — Steven Schlesinger of Garden City, N.Y. — Mr. Trump argued that the financial crisis allowed him to invoke the extraordinary event clause in his contract with the bank. Mr. Trump argued Deutsche Bank should pay him $3 billion in damages.

The bank filed its own action against Mr. Trump, demanding he make good on the loan. In a legal filing, Deutsche Bank, which had distributed the loan to a number of other banks, called the lawsuit “classic Trump.”

The standoff culminated with a meeting in Trump Tower, Mr. Schlesinger said.

At the meeting, Mr. Trump threatened to remove his name from the building if he did not get more time to pay. That move, Mr. Trump suggested, would reduce the value of the building.

Ultimately, the bank granted Mr. Trump additional time to repay. And when he did, it was through the Wall Street equivalent of borrowing from one parent to repay the other.

https://www.nytimes.com/2017/07/19/business/big-german-bank-key-to-trumps-finances-faces-new-scrutiny.html?action=click&contentCollection=DealBook&module=RelatedCoverage®ion=Marginalia&pgtype=article
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