“Ultimately, the banks decided that Trump was too big to fail. As they stared into the Trump Organization’s financial abyss, they came to decide that Trump’s assets — the buildings, the casinos — were worth more with his name still attached to them than they would be in foreclosure.”… “they even put Trump on a $450,000-a-month allowance. In exchange, he would continue to promote the business.”
Yeah, throwing good money after bad. It’s the sunk cost fallacy writ incredibly large
This is a maxim that I fundamentally do not understand. I get its point, but why do banks allow things to reach such a point, apparently routinely? The guys who make decisions at the 100,000,000 level have been around the block a few times, understand financial risks, and presumably know to ask for suitable collateral, especially when lending to shady characters.
I can understand, of course, how people make mistakes in judgment, fail to do due diligence, and all that, but why should it get to the point that there’s an axiom suggesting that a businessman who owes 100 mil, and fails, is now the owner of the bank? How come the bank doesn’t go up to Trump and say, “We’re now the owner of $100 mil of your businesses, Mr. Billionaire. We’re liquidating on Tuesday unless we have a check from you Monday at close of business bringing your loan payments up to date” like they would with any of us? Isn’t this stuff you learn on the first day of your MBA courses?
From the link I posted. "He — you know, he’s the P. T. Barnum of the 21st century.” I think that sums it up.
The banks aren’t going to liquidate that much if they can help it, IMHO. Going down that route would lessen the value of the assets and be more expensive than propping 'em up.
I get the feeling those bankers must have had the mindset of so many folks who get ensnared in Trump’s dealings and find themselves ruined: “Okay, so he’s stiffed all those people, and blamed all those other people for his disasters, but ME? I’m smarter, I can outsmart him and prosper!”
That’s as good an explanation as any. As I said earlier, I can’t imagine why any sane businessperson would do business with Trump. To quote the great Aesop again, “You knew I was a snake when you…etc…”
I admit it’s just my gut feeling. But I feel that the people doing business with Trump at that level are just as corrupt as Trump is - but aren’t as stupid as Trump is. When Trump commits a crime he feels the need to go out and tell everybody about it. Trump has that stupid man syndrome that makes him run around telling everyone how smart he is.
Meanwhile the smart criminals are pocketing the actual money they ripped Trump off for and not worrying if Trump is telling everyone he outsmarted them. They’re keeping score with money not press coverage.
They gave HIM $450,000 a month.
And if they’re getting $2,000,000 a month out of the deal, they’re making a profit.
I don’t see why people have a hard time accepting the possibility, even the likelihood, that Trump is the patsy in a deal.
I assume that when he met dictators as President, the dictators outsmarted him and got more out of the negotiations than Trump got. And then Trump bragged about he won the deal because he didn’t understand what happened.
And I believe the same is true when Trump met with other businessmen. They would outsmart Trump and get more out of him than he got out of them. But he wouldn’t be able to figure that out and would emerge from the meeting, thinking (and bragging) that he had won “the deal”.
The dictators and businessmen who outsmart Trump and are gaining from him have no reason to dispute Trump’s account of how he won. As long as Trump thinks he wins at deal making, he’ll be eager to come back for future deals and give up more. These guys are smart enough to realize that actually winning is more important than telling people you’re winning.
Even if they aren’t making a profit, it can make sense.
The individual bankers/executives in charge of these deals don’t really need for the deals to be profitable. They just need to avoid any large costs (like having to deal with Trump defaulting on all that debt) before they retire or move on. It’s the bank’s liability, after all, not their own. Or maybe find some other patsy bank or investment group to offload the costs down the line. The chance they’ll be personally liable for the eventual shitshow exists but can (and obviously has) be made pretty low.
As long as the cost can be kicked down the road and perhaps be made to fall on somebody else, the individual people involved can still look like they’re doing a good job and retire wealthy, no matter what sort of albatross they’ve chained around their employer’s neck.
Seems like doubletalk to me.
You just demand twice as much in collateral as the loan “requires” so if the asset loses value because you’ve taken it, you’re still covered.
It’s not like banks need to take lessons in how to make sure they’re covered in case a borrower defaults on his loan. Like I say, they cover this stuff on the first day of MBA school.
A story Trump himself has literally told at a rally.
In donald’s case, the answer begins with “Fr” and ends with “aud”.
Perhaps it has to do with the fact that his businesses aren’t worth what he’s claimed.
I can see it. I guess I’ll amend my earlier statement a bit: I can see an unscrupulous businessperson doing business with Trump to the extent that they could bulldoze terms that screwed Trump to the wall. What I can’t fathom are the banks that depended on Trump’s acumen and good faith.
But I still would never do business with him because (1) I don’t believe in screwing people to the wall; a good deal is fair and benefits both parties. And (2) I wouldn’t do business with an evil @#$& like Trump, for the same reason I wouldn’t do business with Hitler (sorry, yeah, I went there). Doesn’t matter if the specific deal seems ethical.
Also, from someone who spent 40 years in financial services, the last thing banks (and others with claims to collateral) want is to foreclose and claim the assets. That is an expensive, enormous pain in the ass, and managing that transition is not what they do well. They want solid deals where nobody defaults. So, yes, the threat that they’ll take your stuff is real, but nobody on either side wants it to go there.
It’s an axiom that has nothing to do with Donald.
Well, good, because I want nothing to do with him, either.
This is essentially the way I see it. Businessmen who are smarter than Trump and ethical won’t do business with Trump; they can see he’s corrupt and incompetent.
Businessmen who are smarter than Trump and similarly corrupt will do business with Trump but their plan will be to rip off Trump. And they’ll succeed because they’re smarter.
I think there are very few people out there who have access to hundreds of millions of dollars but are dumb enough to trust Donald Trump. If they existed, they were already ripped off by somebody who was smarter than Trump before he was able to spot them.
Mike Lindell is estimated to have around $50M net worth.
But not hundreds of millions, true.
At the moment…