In an exclusive interview with International Business Times, U.S. Senator Bob Corker, R-Tenn, denied knowing about a controversial last-minute provision slipped into the Republican tax bill that could personally enrich him. Corker, the lone Republican to vote against the original Senate bill, which didn't include the provision, also admitted he has not read the final tax bill he announced he will support.
A trio of Democratic Senators, meanwhile, slammed the provision, which was first reported on by IBT.
Corker’s vote is considered pivotal in the closely divided Senate and he could be in a position to make or break the landmark legislation. He declared his support for the final reconciled version of the bill on Friday after GOP lawmakers added a provision that could benefit his vast real estate holdings -- a provision that Corker denied having any knowledge of.
In a series of rapid-fire telephone interviews, Corker asked IBT for a description of the provision, and then criticized it. But minutes later, he called back to walk back that criticism, saying he wanted to further study the issue, and that it was more complex than he initially understood it to be. Despite potentially holding the fate of the entire tax bill in his hands, Corker told IBT that he has only read a short summary of the $1.4 trillion legislation.
“I had like a two-page summary I went through with leadership,” said Corker. “I never saw the actual text.” Despite not reading the bill -- and having time to read it before the final vote scheduled for this week -- he reiterated his support for the bill to IBT, support he announced hours before bill’s full text was publicly released on Friday.
Corker called IBT to respond to a series of IBT investigative reports showing that he switched his vote to “yes” on the tax legislation, only after Republican leaders added in a provision reducing taxes on income from real-estate LLCs. Federal records reviewed by IBT show Corker, a commercial real estate mogul, made up to $7 million last year from such income. President Donald Trump's financial disclosures listed between $41 million and $68 million of the same income.
After the report, Corker called IBT and asked for a detailed description of the provision, insisting he did not know about. After the provision was described, he said: “If I understand what [the provision] does, it sounds totally unnecessary and borderline ridiculous.”
A few minutes later, however, Corker called back, and tried to back off that criticism.
“I don’t really know what the provision does to be honest. I would need an accountant to explain it,” Corker said. “I had no knowledge of this and would have no knowledge of it except for you guys are calling me about it. I have no idea whatsoever whether it impacts me or doesn’t impact me.”
The provision was not included in the bills that originally passed the House and Senate. Corker previously said he opposed the legislation because he was concerned about it increasing the deficit, but on Friday he announced he would support it -- even though Congress’s own Joint Committee on Taxation projects that the legislation will increase the deficit by $1.4 trillion.
Responding to IBT's revelations, Democrats denounced the provision as a giveaway to the wealthy. Maryland Sen. Chris Van Hollen called the tax break "unconscionable." Ohio Sen. Sherrod Brown denounced it as an example of a deal cut "for millionaires behind closed doors." Oregon Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee, blasted the provision in a statment to IBT.
“This new real estate carve out was airdropped in at K Street’s bidding, widens the proposed passthrough loophole and gives away an even bigger tax cut to Trump and his wealthy friends," Wyden said. "Combined with tax cuts for the one percent, these breaks create a bonanza for the politically powerful and well-connected at the expense of the middle class.”
The Trump administration has waived part of the punishment for five megabanks whose affiliates were convicted and fined for manipulating global interest rates. One of the Trump administration waivers was granted to Deutsche Bank — which is owed at least $130 million by President Donald Trump and his business empire, and has also been fined for its role in a Russian money laundering scheme.
Under laws designed to protect retirement savings, financial firms whose affiliates have been convicted of violating securities statutes are effectively barred from the lucrative business of managing those savings. However, that punishment can be avoided if the firms manage to secure a special exemption from the U.S. Department of Labor, allowing them to keep their status as “qualified professional asset managers.”
In late 2016, the Obama administration extended temporary one-year waivers to five banks — Citigroup, JPMorgan, Barclays, UBS and Deutsche Bank. Late last month, the Trump administration issued new, longer waivers for those same banks, granting Citigroup, JPMorgan, and Barclays five-year exemptions. UBS and Deutsche Bank received three-year exemptions.
In the year leading up to the new waiver for Deustche Bank, Trump’s financial relationship with the firm has prompted allegations of a conflict of interest. The bank has not only sought the Labor Department waiver from the administration, it has also faced Justice Department scrutiny and five separate government-appointed independent monitors. Meanwhile, the New York Times recently reported that federal prosecutors subpoenaed Deutsche for “bank records about entities associated with the family company of Jared Kushner, President Trump’s son-in-law and senior adviser.”
All of these interactions with the Trump administration and the federal government are transpiring as Deutsche serves as a key creditor for the president’s businesses.
Trump owes the German bank at least $130 million in loans, according to the president’s most recent financial disclosure form. Sources have told the Financial Times the total amount of money Trump owes Deutsche is likely around $300 million. The president’s relationship with the bank dates back to the late 1990s, when it was the one major Wall Street bank willing to extend him credit after a series of bankruptcies. In 2016, the Wall Street Journal reported Trump and his companies have received at least $2.5 billion in loans from Deutsche Bank and co-lenders since 1998.
The relationship has had problems. After the financial crash, Trump defaulted on a $640 million loan from the bank. Deutsche brought Trump to court, and the famously litigious real estate mogul countersued for $3 billion in damages, claiming the financial crisis was a “force majeure” event that Deutsche Bank helped create. But the rift was short-lived: the parties settled, the loan was repaid, and Deutsche was soon lending to Trump again.
In December, Bloomberg and others reported the bank had turned over financial records to special prosecutor Robert Mueller after his office subpoenaed the records as part of his investigation into possible collusion between the Trump campaign and Russia during the 2016 election. Trump’s lawyers have called that reporting inaccurate.
“We have confirmed that the news reports that the Special Counsel had subpoenaed financial records relating to the President are false,” Trump attorney Jay Sekulow said in a statement. “No subpoena has been issued or received. We have confirmed this with the bank and other sources.”
Less than three weeks later, the New York Times reported federal prosecutors had subpoenaed Deutsche Bank records related to White House senior adviser and Trump son-in-law Kushner and his vast business holdings. There is no evidence those subpoenas were related to Mueller’s investigation.
The subpoenas come less than a year after Deutsche Bank was fined $425 million by New York State for laundering $10 billion out of Russia.
All five of the banks granted waivers from the Obama and Trump administration were fined for their involvement in the LIBOR scandal that led to $9 billion worth of fines from regulators around the world. Deutsche Bank has paid $3.5 billion for its role in the scandal, more than any other bank. The scandal involved illegally manipulating the London Interbank Offered Rate or LIBOR, which is used to set the cost of borrowing for a variety of financial transactions.
In 2015, Deutsche Bank pled guilty in the U.S. to wire fraud for its role in the scandal. Less than two years later, in the final hours of the Obama administration, Deutsche Bank agreed to a $7.2 billion settlement with the Justice Department for misleading investors in mortgage-backed securities between 2006 and 2007.
WASHINGTON (Reuters) - The U.S. derivatives regulator is set to announce it has fined European lenders UBS, HSBC and Deutsche Bank millions of dollars each for so-called “spoofing” and manipulation in the U.S. futures market, three people with direct knowledge of the matter told Reuters.
The enforcement action by the Commodity Futures Trading Commission (CFTC) is the result of a multi-agency investigation that also involves the Department of Justice (DoJ) and the Federal Bureau of Investigation (FBI) - the first of its kind for the CFTC, the people said.
The fines for UBS and Deutsche Bank will be upward of ten million, while the fine for HSBC will be slightly less than that, the people said, without providing exact figures.
Spokesmen for HSBC, Deutsche Bank and UBS declined to comment.
Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.
Spoofing is a criminal offence under a provision implemented as part of the 2010 Dodd-Frank financial reform.
Some of the manipulative behaviour came to light as a result of the authorities’ previously-settled probes into forex market manipulation while UBS self-reported the wrong doing, according to two of the people with knowledge of the matter.
The bank investigations have been ongoing for more than a year, one of the people said.
The settlement is the most high-profile brought so far by the CFTC’s head of enforcement James McDonald who was appointed to the role in March 2017.
McDonald, who was previously a prosecutor in the Southern District of New York, said in September he plans to encourage companies and staff to report their own wrongdoing and cooperate with investigators, a strategy he hopes will make it easier to prosecute more individuals.
In August, a U.S. appeals court upheld the conviction of former New Jersey-based high-speed trader Michael Coscia who was the first individual was the first person to be criminally prosecuted for the manipulative trading practice.
A spokeswoman for the CBOE, one of the U.S.’s major futures exchanges, declined to comment. A spokeswoman for the CME Group, the other major futures bourse, did not immediately respond to a request for comment.
(This story has been refiled to remove extraneous words from penultimate paragraph)
Reporting by Michelle Price; additional reporting by Karen Freifeld in New York; editing by Clive McKeef
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