Mr. Trump sees a dark conspiracy. He says Deutsche Bank, through a subsidiary, owns $30 million of the junior loan, and he says that is a blatant conflict of interest because in some cases the interests of the two loans can differ. To Mr. Trump, the bank’s actions suggest it is trying to seize the building just before its great success is assured.
The bank responds that the loan agreement makes clear that it has a right to do everything it has done, and that Mr. Trump should live up to his obligations, paying $40 million of the $334 million outstanding balance on the construction loan. The rest is owed by the Trump-controlled company sponsoring the project but is not personally guaranteed by him.
If Mr. Trump was forced to pay the $40 million, he would be unlikely to permanently lose it, since his company would owe it to him. If the project went under, his claim would rank higher than the Fortress loan. Deutsche will make nothing from its investment in the junior loan if Mr. Trump does lose any money.
Some sort of settlement seems wise. It is in everyone’s interest that construction be completed, and in fact the bank advanced $13 million to pay contractors’ bills this week.
Mr. Trump has not said by how much he thinks the apartments are overpriced, and he did not tell me. But it seems unlikely that sales will be very good until prices are cut.
In his suit, Mr. Trump claims that the bank’s “predatory lending practices” are harming his reputation, “which is associated worldwide with on-time, under-budget, first-class construction projects and first-class luxury hotel operations.”
The bank seized on the opportunity to discuss Mr. Trump’s reputation. “Trump is no stranger to overdue debt,” it said in asking that his suit be thrown out of court. It noted that Mr. Trump’s casino operations have filed for bankruptcy twice, adding, “This suit is classic Trump.”
The bank did not discuss why that history did not dissuade it from making the loan. One explanation might be that the fees it got for arranging the loan more than offset the risk from the small part of the loan it kept on its own books.
Mr. Trump is vigilant in protecting his reputation. After I interviewed him and two associates, his general counsel sent me a note saying “it was a pleasure” talking to me, and adding: “Please be assured that if your article is not factually correct, we will have no choice but to sue you and The New York Times.”
The Friday after Thanksgiving was not a really good one for Mr. Trump. Trump Entertainment Resorts , the casino company, announced it would miss an interest payment on its bonds, raising the likelihood of a third bankruptcy. Most of the shares are publicly owned, having been distributed to creditors in the last bankruptcy. They have fallen from a peak of $23.80 two years ago to 24 cents on Thursday.
Mr. Trump is doing his best to sound like that is not important to him. The casino company’s announcement emphasized that Mr. Trump was the “nonexecutive chairman” who was “not involved in the daily operations” of the company. He told me that “less than 1 percent of my net worth” is in the casino company.
At the current price, no shareholder could have a large net worth in that stock.
On the same day, in New York, Deutsche Bank asked a judge to issue a summary judgment requiring Mr. Trump to pay the $40 million.
In that filing, the bank quoted from a best-selling book Mr. Trump wrote last year, “Think Big and Kick Ass in Business and Life.” In it, the developer said he loved “to crush the other side and take the benefits” and mocked the banks that had lost money on loans made to him before another real estate downturn, in the 1990s:
“I figured it was the bank’s problem, not mine. What the hell did I care? I actually told one bank, ‘I told you you shouldn’t have loaned me that money. I told you the goddamn deal was no good.’ ”
If Mr. Trump manages to persuade a judge that the current crisis provides him with a good reason not to meet his obligations, he will have some great tales to tell in his next book.