During the election, Donald Trump fessed up to over $300 million in debt. But as it turns out, there was a huge deficit in his deficit reporting.
Last May, Mr. Trump filed a financial-disclosure form with the Federal Election Commission that listed 16 loans worth $315 million that his businesses had received from 10 companies, including Deutsche Bank AG. But that form reported debts only for companies he controls, excluding more than $1.5 billion lent to partnerships that are 30%-owned by him.
Many of Trump’s debts have been bundled up and traded off to companies other than the banks where they originated. The Wall Street Journal doesn’t shy away from what this means.
As a result, a broader array of financial institutions now are in a potentially powerful position over the incoming president. If the Trump businesses were to default on their debts, the giant financial institutions that serve as so-called special servicers of these loan pools would have the power to foreclose on some of Mr. Trump’s marquee properties or seek the tens of millions of dollars that Mr. Trump personally guaranteed on the loans.
Donald Trump’s finances are a intentionally confusing, tangled swamp in which Trump helms 516 different “companies,” many of which exist only to own other companies. It’s designed to allow Trump to take advantage of as many tax breaks as possible, and to make it difficult for anyone to track what he really owns, or owes.
But it’s clear that Trump is over the barrel to 150 companies for three times the amount he admitted during the campaign. And that’s not all.
The power that these companies have over Trump could be expressed in many ways. For example, Wells Fargo is currently in a bind because it had a habit of creating fraudulent accounts in the name of its customers. However, Wells Fargo is also holding $282 million in loans directly to Trump, as well as another $950 million in debt on a property partially owned by Trump through one of his companies. How much leverage does that give Wells Fargo when it comes to disregarding the rules?
MetLife has a $300 million loan to a Trump partnership, and is fighting with regulators over how it is classified as an institution. Where might MetLife look for a little help?
Personal guarantees from Trump are behind $260 million in loans for Trump Tower and 40 Wall Street, and those loans have been sliced, packaged, and passed out to an array of companies who all now have a hold on the incoming president.
Who controls Trump’s debt? In many cases, we simply don’t know.
It is impossible to identify all the firms or individuals that now hold Trump businesses’ securitized debt, as these investments often don’t have to be disclosed. Morningstar’s analysis of filings by mutual funds found 151 that own parts of the pooled debt.
That’s 151 institutions … and it still doesn’t touch on debt that Trump or his sons have acknowledged from other sources. It’s going to be almost impossible to enforce any regulation without running into someone who has an in with the boss.