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Trump Wants To Restructure $300 Million Loan From Deutsche Bank

Deutsche Bank AG (USA) (NYSE:DB) is in a major bind right now, as it struggles with a dilemma on how to deal with a massive loan to President Trump’s real estate business.

Deutsche’s conundrum boils down to a single small detail, reports Bloomberg:

The issue is a personal guarantee Trump gave Deutsche Bank when the debt was negotiated from 2012 to 2015, according to a person with knowledge of bank discussions. The debt — on a Florida golf resort, Washington D.C. hotel and Chicago tower — is being paid. But under the agreements, if the loans default, the bank could go after Trump’s other assets.

Now that Trump occupies in the Oval office, many lenders are seeking to distance themselves from any possibility of collecting debt from a sitting U.S. president. But if Deutsche simply nixes Trump’s personal guarantee in the loans, it would rightfully be subject to a great deal of scrutiny. Many would see the move as an attempt to gain political favor.

But if the interest rates rise on the debt amid restructuring, Deutsche could instead draw the scorn of Trump’s businesses, and likely his administration as well. The President has thus far refused to separate himself legally from his real estate and other ventures, instead simply passing on the day-to-day operations to his children.

The struggling German banking giant already has a lot on its plate as is. Deutsche Bank was forced to sell shares in order to keep its balance sheet in order last week, and a new report indicates it might face large additional fines for alleged forex market manipulation.

Last year, as DB’s U.S.-listed shares approached single digits, it seemed as though a bailout from the European Union might be necessary to prevent a potential meltdown. The company has thus far avoided a catastrophe of that magnitude, and its stock has rallied about 42% over the past six months.

Deutsche Bank AG (USA) (NYSE:DB) fell $0.19 (-1.13%) in premarket trading Monday. Year-to-date, DB has declined -8.18%, versus a 3.86% rise in the benchmark S&P 500 index during the same period.

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