para bellum
Platinum Member
Eh? Trump was not charged with fraud in any degree.Yes. He was charged with fraud in the second degree. What the banks did or thought is not relevant. He falsified records. The bank going along with it doesn't change that fact.
He wasn't even charged with the misdemeanors of falsification of business records, because that would have required a trial, and a conviction would have required proof of scienter (which was not shown in the case).
The banks made their own assessments. They estimated Trump's net worth at $2.4 Bn. They also said they routinely use 50% of the borrower's estimates.
The loan was a "full-recourse" loan, meaning it had Trump's personal guarantee. The lender was the investment bank division of Deutsche Bank.
The interest rate the judge used for comparison was based on a "non-recourse" (no guarantee) loan from the Commercial division. That was not an "apples-to-apples" comparison.
Trump exaggerated his net worth, but the banks made their decision based on his actual net worth, which matched other estimates like Forbes and Bloomberg- not an inflated value.
The low interest rate reflects the full-recourse type of note. Banks don't want to own property, especially something like a golf course. So the no-recourse loan has a high interest rate to protect them from having to dispose of a hard-to-sell property in the case of a default.
They were not at risk of that, because Trump had the money to cover the loans. The banks also said they weren't worried because they knew Trump would put a lot of his own capital in the project, so there was very little chance of the value going down.