Donald Trump says he won't be able to post the $454 million bond required by his loss a few weeks ago in a New York business fraud case:
In a filing to a New York appeals court, Trump said that the judgment, ordered by a state judge last month, was so large that suretors wouldn’t accept real estate as collateral and would require cash to guarantee the bond. A private company like the Trump Organization would need $1 billion in cash to obtain the bond and to continue to operate, an amount the company doesn’t have, the filing said.
....[If] he is unable to obtain a bond, New York Attorney General Letitia James, who sued Trump in 2022, could begin enforcing the judgment at the beginning of next week. James, a Democrat, has said that if Trump can’t come up with the money, she will look to seize his assets.
It's not clear to me why nobody is willing to accept real estate as collateral. Is it because the commercial real estate market is tanking and they're unsure Trump's holdings will maintain their value a year from now? Or that they're unsure they'll be able to seize the collateral if they have to? Or that they just don't trust Trump?
Oh well. It should be fun if Letitia James starts trying to grab Trump's buildings. Like they say, if you can't do the time, don't do the crime.
Cue Elon Musk, Vladimir Putin or the RNC to the rescue. While I devoutly wish the property seizures would take place, I don't believe I'll live to see the day. Trump weasels out of everything eventually.
As I understand it, Elon is the one building a Tesla factory in Mexico which Trump demonized in his bloodbath speech. So maybe he’s not so anxious to bail Trump out.
I feel like if one of them could save Trump, they would have. Trump was recently begging Musk to buy Truth Social without success.
Couldn't anyone with ten bucks buy the essentially worthless Drumpf ALL CAPS platform?
Not currently, there's alot of bad money and people 'hodl' truth right now.
But Musk's money is mostly in currently tanked or locked stock, so he can't come to the rescue. (Not that he would, he doesn't do anything except for himself)
"I feel like if one of them could save Trump, they would have."
Maybe!
On the other hand, Trump wrote a similar letter about a week before the Carroll case bond was due and he came up with the cash to pay that one.
We'll find out soon enough (next week), but until them I'm going to treat this like just another in 1,000+ times Trump has followed Roy Cohn's legal strategy of "delay, delay, delay".
The RNC would struggle to come up with $4.5 million at the moment, let alone 100 times that sum.
The real estate is probably so heavily mortgaged that there's not enough equity left to cover the bond.
This is what I was thinking.
Yeah he owes the Turks, Saudis and Russians
Yes. Mortgaged and encumbered with liens from innumerable suppliers and craftspeople who haven't been paid.
Also, why would banks and insurance/surety companies want to lend to a lifetime crook who has just been convicted of defrauding banks and insurance companies?
Three cheers for New York State's "Put Up or Shut Up" rule on appeals. Too bad courts in the Defendant's many other venues don't operate that way. The wheels of justice might actually move...
"why would banks and insurance/surety companies want to lend to a lifetime crook who has just been convicted of defrauding banks and insurance companies?"
Axos Bank loaned the defendant more than $200M last year. The CEO of Axos is a major Republican donor.
Chubb Insurance put up $90M as a surety bond for Trump in the E. Jean Carrol case just a couple weeks ago. The CEO of Chubb was appointed by Trump to a White House advisory committee during his presidency.
The answer to your question is that *no one* would loan money to Trump for business reasons. But some people out there will do so for other reasons.
Apparently not a billion dollar's worth, though.
Which is surprising, because I was thinking the same thing - some Republican mega-donor will step up to the plate and help him out in exchange for some kind of favor.
And trust him to make good on the favor? Not even those idiots are that stupid.
Good points! Those creditors are not buying real estate. It's a "Get a Piece of the Don" fire sale. Bargain basement influence -- assuming he wins. And if he doesn't, he'll storm the Capitol again and this time, they'll use their guns. Blood in the streets!
While people like to tell Single Person tales in ignornce of corproate structures and , a multinational conglomerate like Chubb, decisions on underwriting are not made by a CEO alone. Chubb, a Swiss-British origin entity listed on NYSE did not make an underwriting due a CEO being on a silly advisory committee, which is TV movie level logic. That is a nice Lefty Just So Story but the actual story is rather more banal (and likely financially stressful to Trump).
Axos bank as a small closely held entity is more plausible on the tied lending, although the CEO being a Republican donor and as a Federally chartered lender making such a loan is not so straight, but plausible.
Lending to Trump for business reasons when one is properly secured by liquid collateral and able to charge profitable rates is quite foreseeable (claims otherwise are simply political).
No one with eyes open would of course lend to him on a business basis unless one was very well collateralised with high quality collateral (i.e. not his RE assets notably after the NY trial rather demonstrating he lies as he breathes in his documentation so one can not be readily sure what free equity is actually in those buildings)
If the political affiliations of the CEO are not influential in influencing whether the company takes a particular risk (and neither is the CEO himself ), can you explain why Chubb wrote this bond knowing full well that if Trump loses the election and his appeal, they’re never going to see a penny of their loan repaid. Why is this apparently the only insurance company or bank willing to lend Trump money?
The Chubb bond is secured by negotiable securities held in a Charles Schwab account. If Trump loses the appeal and fails to pay the judgment, the court would call on Chubb’s bond and Chubb would seize the securities. They got Trump’s first $100 million, but he doesn’t have another $500 million in cash and securities to give any other bonding company. A bonding company will take a bank letter of credit, but they never take real estate as collateral from anyone—they’re just not in the real estate lending business.
Banks will provide a letter of credit backed by real estate, but no bank that a bonding company would approve will lend $500 million to Trump because he’s a terrible credit risk.
If TFG gets re-elected, fronting his bond is probably a good investment. If he doesn't get re-elected it is manifestly a bad investment. Individuals who make their living evaluating risks took a hard look and decided Donald was not a worthwhile investment. Good to know.
Unless Trump refuses to pay.....
Chubb is a subsidiary of a Swiss company. I think it's exceedingly improbable its CEO would be allowed to risk $90 million in a partisan political cause. More likely Chubb's bond dried up most or all of the collateral Trump could put up in a standard commercial arrangement, and there's nothing left in the cupboard.
This; plus his mortgages/loans have clauses which effectively state that they cannot take a back seat to other loans on the same property (a court-ordered bond would necessarily take precedence when it comes to repayment), that he must maintain a certain % unencumbered ownership of the property, that he must maintain a certain level of cash reserves, and so on...
I'm sure this is a big reason, but I bet they also know when trump has to pay up, doesn't have the money and they need to seize the collateral, he'll do everything in his power make it slow and costly, especially if he's in the white house.
Not only is it likely heavily encumbered, I don't understand Kevin's confusion.
Banks want money, not CRE. So if they have to get their money back, they need to find someone to buy the building. Even in good times, the market for 9-figure buildings is small.
And now it looks like we have more downtown CRE than we need. Many office workers have learned they have sufficient leverage to avoid the commute, because it doesn't hurt business. (It probably hurts incoming junior employees' career development, and it definitely hurts insecure managers' feelings.)
So back to the question. It starts with, how much are those buildings worth today, even if you ignore the encumbrances? I suspect it wasn't so much that nobody would take CRE as collateral, it was that Don Trump wouldn't offer enough of them at valuations the lenders would accept, given their declining value and risk.
Bedminster must be worth a bit, but I suppose Trump would be very reluctant to part with it, it being the family cemetery and all.
It's not an uncommon thing to be asset rich and cash poor when real estate is your main asset and collateral. Given TFG's long record of screw ups and bankruptcies in parallel with a number of rather strange and grifty ventures (Trump Airlines, Trump Steaks, Trump Vodka, Trump's charitable foundation, Trump University, etc.) he always seemed to be rummaging around in the sofa looking for quarters that had fallen from visitors pockets.
And that is why I have never believed he is actually a billionaire. He doesn't act like one.
Would you loan money to a person who is (a) a deadbeat, and (b) stands a good chance of being president?
I mean, all of this Trump litigation is a real time example of how time consuming and expensive it is to hold an ex-president accountable. Imagine trying to get your money back if/when he's in the whitehouse.
And this specific litigation is all about how Trump inflated the values of his properties, so that alone is reason to give a lender pause in accepting them as collateral.
That's all before we get to the question of whether or not Trump actually owns much of anything that isn't already leveraged and liened to the hilt.
Presumably the media will come out saying that this shows that he lied when he claimed he is worth several billions in 2016, e.g.
https://www.nbcnews.com/politics/2016-election/donald-trump-claims-hes-worth-10-billion-n392706
Buying a former and hopeful president - nothing to see here folks...
So, Jared wouldn't cough up the bucks then.
Ha ha ha! That's right! Jared and Ivanka have money, so what's the problem? Ha! The problem is they know they'd never get their money back.
If you are referring to that $2 billion dollars, actually they don't own it. They are managing Saudi investment and getting a management fee. In return, according to March 4 article in the NYT:
Still a lot of suspicions about the favorable terms - but they don't own that Saudi investment any than Bernie Madoff owned his clients investments.
Ummm...
Questions of ownership have never previously been an obstacle to the Trump family and I can think of no reason why they would become one now. If Jarred wanted to bail Trump out, he could certainly lend him the Saudi money and hope for the best. And the Saudis might actually be okay with that because if Trump gets the White House back, they’ll basically get to run the country.
I'd bet most of Trump's real estate is tangled up with liens, loans, partnerships, deals, trusts, and such -- he doesn't own it outright. What I've heard (it's not my field) is that backers for bonds greatly prefer their collateral free and clear of those things.
And yeah, the way builders in Seattle talk, the market for commercial real estate, esp. office space, is going down the tubes.
But this could be a dramatic setup for pulling a rabbit out of a hat, like he did with the $91m bond for the Carroll case -- he begged the court, said he couldn't, whined some more, then did it anyway. He did say in a recent deposition that he had $400m in cash on hand and more coming in ... not that I believe a word of it.
The (so far hypothetical) backers of this bond have to figure that there is a high probability that Trump's appeal will fail and they will have to pay out. At that point, either Trump reimburses them, which he apparently can't do, or they realize on their security. Given the high probability that the bonding company will have to realize on its security, they will want very good security. If the security is real estate, "very good security" means mortgages for no more than 50-60% of the appraised value (as determined by an appraiser chosen by the bonding company, not by Trump). Trump may have substantial equity but if his properties are already mortgaged for more than 60% of fair market value, they are valueless as security to any bonding company.
The only collateral a bonding company will accept is cash or marketable securities.
They won’t take real estate as collateral from anyone.
The purpose of the bond is to allow the use of appreciated stock as collateral without having to sell the stock and pay taxes on the capital gain.
Bonding companies are not in the business of lending with real estate as collateral.
i'd love to see them take his jet and paint 'Letitia' on the side
Jet, nothing. I want "LETITIA" replacing the big gold letters on 40 Wall Street.
Call it, "AG James Place"
Before anyone gets too excited about this, I suggest reading this Forbes article:
https://www.forbes.com/sites/danalexander/2022/07/29/donald-trumps-great-escape-how-the-former-president-solved-his-debt-crisis/?sh=563e80803970
I remember how everyone was talking about how Trump was in deep doo-doo after his Presidency with numerous loans coming due. But those problems melted away and I wondered what happened. So I tried a Google search and found the above article that explained the situation. Based on that, and how he managed resolve his money problems in the 90’s and how difficult trying him criminally has been, I have come to the conclusion that Trump a slippery little devil and I will not be surprised if he manages to slip out of this mess too.
Thanks for the link, just starting in on it. I remember that speculation too. But pending further information I'm inclined to agree with posters about how much of his real estate is pledged to a zillion loans, deals, side deals, tax arrears, and you name it. He tries to do everything through a bunch of LLCs and other opaque vehicles so only he could ever know what's really going on, if he cared to; a classic shell game that would take years to figure out. But he probably has enough linkage going on that whatever problems he has become somebody else's problems in a hurry.
I did see where somebody points out that the half-billion is a couple hours of cash flow for some sovereign wealth funds (it was at LGM, I think), plus there's his old buddy Putin. So somebody is likely to end up with trump's family jewels in a jar-- or what's left, because so many people around the world appear to have bits of them now. Even more than what he owns, we still really have no idea who he ultimately owes, do we? And the bigger the debt, the bigger the worry that becomes.
That's what I figured would happen - that they'd find somebody to spot him the money for the bond. But unless this is just a last ditch attempt to get it knocked down, it doesn't seem like it's happening this time. Maybe he's at the limit of what even friendly and shady investors will give him in new debt.
I am reminded of his lawyer's quote two weeks ago, "No one, including Jeff Bezos, Elon Musk and Donald Trump, has five hundred million laying around."
Bezos and Musk could probably put a tiny fraction of their stock holdings as collateral if they had to.
Yet, the real problem Trump is facing is that his wealth is an illusion constructed with smoke and mirrors.
I say he declares bankruptcy before August.
Actually, I think Taylor Swift does, not she’d help him out.
I can't speak from personal experience, but I'm told that rich people generally don't hold much cash. They put their money into assets that can be expected to earn income or capital gains, and live off the income stream. For occasions when they need big lumps of cash quickly, they have lines of credit.
Musk and Bezos probably have personal lines of credit with limits measured in billions.
A bonding company would certainly take a reputable bank’s letter of credit as collateral, but no reputable bank would lend to Trump.
"Is it because the commercial real estate market is tanking and they're unsure Trump's holdings will maintain their value a year from now? Or that they're unsure they'll be able to seize the collateral if they have to? Or that they just don't trust Trump?"
How about "all 3" for the win? I don't know what's untrustworthy about a man who famously stiffs all his creditors and contractors, ties up all litigation for decades when you sue him for damages, and yet still managed to bankrupt several casinos during the heyday when Atlantic City had a monopoly on east coast gambling. But I wouldn't loan his sorry ass one dollar.
You don't even need to look at Trump's history. He's trying to get a bond posted to cover a judgment against him for very large scale fraud. That one data point could be expected to be enough to make any bonding company extremely cautious about dealing with him.
Reading the actual article it is not obvious that Trump actually cannot post the bond. He is clearly trying to avoid it, by arguing that he can't. But that doesn't tell us what the actual situation is.
We will actually know only when either he posts it, or they start seizing his properties.
Good call. Well observed.
Right? I'm thinking it's more of a fundraising call to action.
He would have to raise an amount equal to a little less than half of all spending (SuperPACs and his campaign) on his 2020 re-election, in a matter of days. Not seeing how this is possible.
He needs a grossly-richer-than-thou benefactor to throw away the bucks, much like one does to feed the fireplace.
And a challenge to the judges: are you really going to force the next President of the United States into bankruptcy? Ask yourselves, punks, are you feeling lucky?
Refinancing performing real estate with sufficient cash flow is not a great feat. The fees, interest rates and terms of the new loans would be interesting. According to Forbes, he should be swimming in enough cash to secure the bond.
Too bad he didn't remain stuck with that DC hotel that was failing. I guess any other name on the front door but his added significant value to the asset.
He could use the equity in all his RE holdings to borrow money to secure the bond, but it would be real expensive, and he would loose a whole lot of operating control until the loan is repaid.
Trump's new campaign theme Vote for me I need the salary.
Trump is such a litigious, annoying flake of a debtor that I'm not surprised virtually all the companies and investors out there (apparently even the Saudis!) have no interest in guaranteeing him a loan against real estate.
And honestly, why bother? If he can't get the loan, he might have to start selling that stuff at a fire sale price anyways to get the money - you can pick it up for relatively cheap then.
So the fact that a guy who was dishonest about the values of his real estate and who has a history of multiple bankruptcies of companies he;’s managed can’t get a several hundred million dollar guarantee is surprising?
Maybe his son-in-law with his 2 billion in funds from the Saudis can help.
You presume he hasn't already burned through that trying to prop up his father-in-law.
Hey, shouldn't we savor the irony? Like you say, dude's complaining nobody will loan him money against his buildings so he can appeal getting convicted for-- wait for it-- systematically lying about how much his buildings were worth as collateral!
If this claim is true and not just more of his smokescreen of bellyaching, it's the sound of the gods laughing.
Oh, I know!
NFTs. No Fucking Trumps.
A sure-fire winner!
As I have said elsewhere: As Trump lies about everything, I am going to speculate that he has the money, he just doesn't want to use his own. It's the opening gambit on his next grift.
Rule 1 for Trump: never put your own money on the line.
Just a guess, but maybe he is just making it up in a desperate attempt to delay collection? Seems to me that his top-notch legal team might think it'll work. They've come up with some pretty "innovative" legal tactics in the past, after all.
Saw recently a report of a sale of an office building, I think maybe in downtown DC. A building which sold for >$100,000,000 in 2017 was bought for $35,000,000 this year. That kind of haircut would mean TFG would need >1,000,000,000 in real estate to put up.
“A bond of this size is rarely, if ever, seen. In the unusual circumstance that a bond of this size is issued, it is provided to the largest public companies in the world, not to individuals or privately held businesses,” broker Gary Giulietti wrote.
https://apnews.com/article/trump-fraud-bond-appeal-million-75ef3efb5b70d6ea43bea85b65ff7810
*************
like most things trump, his crimings are big, beautiful, and yuuuuge
anyone willing to issue this bond is risking a PERSONAL and PROFESSIONAL BLOODBATH of CATASTROPHIC PROPORTIONS and would be hard to justify to one's VORACIOUS wives (current, former, and future) and their VICIOUS legal counsel
There are two reasons, first, the reputational risk to the banks, look at the blowback Chubb got for issuing the Carroll bond; and the second is he doesn’t have any equity in the properties. He’s at least 100% leveraged, probably a multiple of that.
First off, nobody can trust Trump, period. Second, he has lied repeatedly during the trial and once again, nobody is willing to take his word. So it's likely he put his cards on the table (to bond companies, banks, everyone) and they laughed him out of the room.
It would be a great day if James took his assets, and then announced to the world that Trump isn't even a 1 billionaire!
Just read a New Republic article (https://newrepublic.com/article/179879/trump-legal-debts-chubb-payment) that pointed out some major trump financial issues on top of the current 500 million or so in legal judgements he's on the hook for:
"There’s whatever penalty the IRS may impose when it completes its audit of Trump’s 2015–2019 tax returns. There’s whatever lawsuits Trump’s current lawyers will file when he (or various Trump PACs, or the Republican Party) get tired of paying them. On top of all that, Deutsche Bank’s loans to Trump require him to maintain $50 million in “unencumbered liquidity” and a minimum net worth of $2.5 billion."
What you are saying is all objectively true but, as we’ve seen, it’s also not an accurate reflection of reality. The IRS has given Trump a pass for his entire life. It’s highly likely that he committed the biggest income tax fraud in history and the IRS did nothing even though it must have been obvious to them. The IRS isn’t going to create any problems for Trump or penalize him in any way in the absence of enormous pressure from congress or the public.
The DB loans have always been problematic. To begin with, it’s not clear that the bank actually loaned Donald any of its own money. There’s a lot of speculation that the bank was simply functioning as a conduit for Russian black money as part of its long running money laundering operation in Russia. If that’s the case, it might be dicey for the bank to collect if Donald defaults without essentially reopening the question of its prior criminal activities (for which it avoided serious charges). So they might not be able to collect if he loses and defaults, just as they might face tremendous difficulties in collecting in the event that Trump’s reelected and doesn’t want to repay those loans.
Similarly, we’re seeing how the legal system works when people like Trump want to avoid consequences. He’s got the judge in the Florida case in his pocket and the three other cases are looking very shaky because the judges are all either afraid or Trump or want to help him out.
You cannot assume the IRS has given him a pass. If anything, the issue is that Trump's sprawling lies were complicated and hidden from the IRS, who, without the power of a subpoena, could not understand the lies.
Until now, that is.
Tish James has created a roadmap with all of the evidence to all his tax crimes and given it to the IRS.
People can and do accept real estate as collateral.
The problem is the haircut and the leverage.
My house is worth $1,000,000. a Trump property is worth $100,000,000.
How much will you lend?
It depends on how much equity is there.
We both have a 50% mortgage.
So you haircut my house 30% and say you lend me $200k. That might be a little risky because my house might not sell for $700k. You'd be a lot more comfortable just lending me $100k or 10%.
Trump's properties are far riskier than an average house. You probably want a 50% haircut or maybe even a 60% haircut. If Trump has a 50% mortgage then you won't lend him a dime.
a 60% haircut on a unique property like Mar-A-Lago or a Trump golf course is probably riskier than a 30% haircut on my house.
Trump is too highly leveraged for him to get any quick cash from most of his properties. Especially since he probably used some easy to get to cash to post the $100 million bond with the defamation lawsuit.
Bonding companies require cash or securities as collateral, but they will also accept a letter of credit from a reputable bank.
No reputable bank will lend to Trump, regardless of the collateral. He’s a terrible credit risk.
Apparently, it is a general policy among insurers, and I get it. Selling major real estate is a pain in the ass, takes a long time, and isn't guaranteed to bring back the amount you loaned. Plus, Trump has a 50 year long record of screwing his debtors any way he can. That's why non-Russian banks won't lend to him anymore, not even Deutsche Bank.
But geez. What kind of billionaire doesn't have a billion dollars? This is the first concrete example of something I have long suspected -- that Donald Trump isn't really all that rich.
Can we get a collective "Womp womp?"
"It's not clear to me why nobody is willing to accept real estate as collateral."
I suspect that it is accepted ... just not at the value that the collateral-seeker claims it's worth.
What "Trump says" is what Trump would says whether or not he can post the bond. He's being picked on. Bigly. The world has never seen such a thing.