More Bad News For Trump: His Bank, Deutsche Bank, Was Raided By German Police

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President Trump's dealings with Deutsche Bank are likely to come under greater scrutiny in light of recent developments.

Germany’s Deutsche Bank is in trouble with the authorities again, and this time the massive financial institution’s problems could spell trouble for President Donald Trump as well, Bloomberg’s Timothy L. O’Brien noted on Friday.

German police raided Deutsche's Frankfurt headquarters on Thursday as part of a money-laundering probe related to the Panama Papers scandal. Investigations tied to the 2016 disclosure of previously private bank and legal records linked to shell companies created by a Panama-based law firm, Mossack Fonseca & Co., revealed that Deutsche had used that network to help its clients create offshore accounts and avoid taxes.

German officials said Thursday's raid was unrelated to another problem currently hanging over Deutsche: its role in helping Danske Bank A/S launder billions of dollars for the Denmark bank's clients.

While this is hardly the first time Deutsche Bank has run afoul of the law, it might be the first time Trump is caught up in the mess.

During the 1990s, Deutsche Bank loaned money to Trump when no major U.S. bank would give him the time of day, never mind a loan.

When Trump nearly went personally bankrupt in the early 1990s, he left a handful of major U.S. banks on the hook for about $3.4 billion in loans he couldn't repay (and about $900 million of which he had personally guaranteed). Hotels, casinos, real estate, an airline and other parts of his debt-ridden portfolio went into bankruptcy protection. In the wake of that collapse, Trump became a pariah among major U.S. banks, and he had to find unique ways of lining up money for the infrequent and small-bore deals he pursued thereafter. That left him borrowing money from labor unions and small, local lenders. Deutsche, keen at the time to make a name for itself in U.S. investment banking and commercial lending, was less hesitant to do business with Trump.

Deutsche's first transaction with Trump involved a modest renovation loan for 40 Wall Street, a Manhattan skyscraper Trump controls, in 1998. Trump did little to merit Deutsche's involvement after that until the early 2000s, when it agreed to loan him as much as $640 million for a Chicago project — the Trump International Hotel and Tower.

O’Brien was working on a book about Trump at that time, and in trying to determine the future president’s net worth, he found that Deutsche Bank had a good handle on Trump’s personal finances.

Deutsche had a relatively intimate understanding of Trump's finances. Although Trump told me in 2004 and 2005 that his net worth was anywhere from $1.7 billion to $6 billion (and suggested it might even be $9.5 billion), my sources at the time told me his wealth was closer to $150 million to $250 million. When Trump litigated the point with me, my lawyers produced a Deutsche assessment of his finances that pegged his wealth at $788 million in 2005.

Trump's relationship with Deutsche briefly soured in a dispute over the Chicago project. When the financial crisis landed in 2008 and imperiled that development, Trump sued Deutsche to avoid paying the $40 million he had guaranteed (claiming, in part, that Deutsche was responsible for the global economic distress unleashed by the crisis). A clash like that can permanently unwind a real estate partnership, but Deutsche and Trump agreed to settle, with the bank extending a loan from its private banking division to allow Trump to pay back its real estate lending unit, according to the New York Times.

Trump has since secured a sizable amount in loans from the bank — about $300 million in recent years, O’Brien said, based on media reports and Trump’s government financial disclosure forms.

What's likely now, however, is that Trump's dealings with Deutsche — which have represented, at a minimum, a serious and long-standing financial conflict for him given the influence he wields over law enforcement and financial regulation as president — are about to draw greater scrutiny.

The House Financial Services Committee, which Democrats will take control of in January, has the power to subpoena Deutsche for banking records and other information regarding its relationship with the president, the Trump Organization and the Kushner family. It seems almost certain that the committee will deploy that power — especially given the news that Deutsche has landed in the middle of yet another money-laundering probe.

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