The Trump Organization has reportedly laid off or furloughed around 1,500 workers, many at its hotels and resorts across North America. According to public filings, it has trimmed staff in New York, Washington D.C., Chicago, Las Vegas, Miami, Vancouver and Honolulu,
The coronavirus pandemic has led to the Trump International Golf Club West Palm Beach to miss US $50,000 in rent payments and the Trump Organization is reportedly seeking agreement to postpone loan payments to its lender Deutsche Bank.
And that’s where things get interesting – both for Donald Trump and for Deutsche Bank, which is currently being investigated by the US Department of Justice over money laundering, and was recently singled out by the International Monetary Fund as the institution posing the biggest risk to the global banking system.
The Washington Post writes, “Emblematic of the bank’s problems has been its relationship with Donald Trump, who by the mid-1990s had stiffed so many lenders over the years as a real estate developer that no other bank would have anything to do with him. An initial loan of $125 million in 1998 to rehabilitate an office building at 40 Wall Street was followed by $900 million more for the GM Building on Fifth Avenue and a tower across from the United Nations. And when Trump was on the verge of defaulting on loans used to buy his failing hotels and casinos in Atlantic City, Deutsche Bank came to the rescue by peddling $484 million in junk bonds to investors — bonds on which Trump defaulted within a year.
“Normally, such a default would have been enough to scare away even the most risk-tolerant lenders. But within months, Deutsche Bank’s real estate division was again providing Trump with a $640 million loan needed to build a new Chicago hotel, while its team in Moscow was steering Russian investors to Trump projects in Hawaii and Mexico. The relationship hit a low point in 2009 when Trump announced he had no intention of repaying his loan on the Chicago hotel, claiming that the unfolding financial crisis was an act of God that freed him of his obligation.”
The Bank sued to get its money back, and typically Trump countersued, accusing the bank of predatory lending practices.
Trump eventually received a two-year extension on the loan — and a vow by Deutsche Bank’s real estate lenders never to do business with him again.
Curiously that promise went nowhere as over the next several years Deutsche’s private banking division, provided Trump with US $350 million in personal loans to cover projects in Chicago, Miami and Washington.
The information is clearly documented in ‘Dark Towers” a recent book by David Enrich, finance editor for the New York Times.
In the book that that reads like a fiction thriller, Enrich writes, “The fact that one arm of Deutsche refused to do business with Trump and another arm considered him a marquee client was a perfect illustration of the bank’s dysfunction,”
The Washington Post has reported that there are about US $350 million in outstanding loans and Trump’s currently closed hotels are costing about US $650,000 a day in lost revenue.
Not helping matters, the Trump Organization was excluded from receiving financial assistance in the coronavirus aid package which prohibits businesses ‘controlled by the President, Vice President, Members of Congress, and heads of executive departments from receiving loans or investments from Treasury programs.’