Sunday Long Read: Follow The Funny Money, Honey

This week's Sunday Long read comes to us from the NY Times Magazine, where Dave Enrich  gives us an excerpt from his new book on the subject, Dark Towers, and the story of Donald Trump and Deutsche Bank, and a man named Mike Offit.

The roughly $425 million that Offit helped arrange for Trump back in 1998 was the start of a very long, very complicated relationship between ­Deutsche Bank and the future president. Over the course of two decades, the bank lent him more than $2 billion — so much that by the time he was elected, ­Deutsche Bank was by far his biggest creditor. Against all odds, Trump paid back most of what he owed the bank. But the relationship cemented ­Deutsche Bank’s reputation as a reckless institution willing to do business with clients nobody else would touch. And it has made the company a magnet for prosecutors, regulators and lawmakers hoping to penetrate the president’s opaque financial affairs.

Last April, congressional Democrats subpoenaed ­Deutsche Bank for its records on Trump, his family members and his businesses. The Trump family sued to block the bank from complying; after two federal courts ruled against the Trumps, the Supreme Court has agreed to hear the case, with oral arguments expected in the spring. State prosecutors, meanwhile, are investigating the bank’s ties with Trump, too. The F.B.I. has been conducting its own wide-­ranging investigation of ­Deutsche Bank, and people connected to the bank told me they have been interviewed by special agents about aspects of the Trump relationship.

If they ever become public, the bank’s Trump records could serve as a Rosetta Stone to decode the president’s finances. Executives told me that the bank has, or at one point had, portions of Trump’s personal federal income tax returns going back to around 2011. (Deutsche Bank lawyers told a federal court last year that the bank does not have those returns; it is unclear what happened to them. The Trump Organization did not respond to multiple requests for comment.) The bank has documents detailing the finances and operations of his businesses. And it has records about internal deliberations over whether and how to do business with Trump — a paper trail that most likely reflects some bank employees’ concerns about potentially suspicious transactions that they detected in the family’s accounts.

One reason all these files could be so illuminating is that the bank’s relationship with Trump extended well beyond making simple loans. ­Deutsche Bank managed tens of millions of dollars of Trump’s personal assets. The bank also furnished him with other services that have not previously been reported: providing sophisticated financial instruments that shielded him from risks and outside scrutiny, and making introductions to wealthy Russians who were interested in investing in Western real estate. If Trump cheated on his taxes, ­Deutsche Bank would probably know. If his net worth is measured in millions, not billions, ­Deutsche Bank would probably know. If he secretly got money from the Kremlin, ­Deutsche Bank would probably know.

Until the 1990s, ­Deutsche Bank was a provincial German company with a limited presence outside Europe. Today it is a $1.5 trillion colossus, one of the world’s largest banks, with offices in 59 countries — and, thanks to its well-­documented pattern of violating laws, an international symbol of greed, recklessness and hubris. Its rap sheet includes manipulating international currency markets; playing a central role in rigging a crucial benchmark interest rate known as Libor; whisking billions of dollars in and out of Iran, Syria, Myanmar and other countries in violation of sanctions; laundering billions of dollars on behalf of Russian oligarchs, among many others; and misleading customers, investors and American, German and British regulators.

­Deutsche Bank’s envelope-­pushing helped it become the global power player it is today, but it also left the company dangerously frail. Its books remain stuffed with trillions of dollars of risky derivatives — the sort of instruments that many other banks have disposed of since the 2008 financial crisis but that persist as a kind of unexploded ordnance in ­Deutsche Bank’s accounts, threatening to inflict severe damage on the bank and the broader financial system if something were to cause them to detonate. Its financial cushions to absorb future shocks are threadbare. Its core businesses are not performing well; the bank lost $5.8 billion last year. Because of Deutsche Bank’s size and its connections with hundreds of other major banks around the world, serious problems could spread, virus­like, to other financial institutions. The International Monetary Fund a few years ago branded ­Deutsche Bank “the most important net contributor to systemic risks” in the global banking system.
­Deutsche Bank’s relationship with Trump, rather than being an odd outlier, is a kind of object lesson in how the bank lost its way. The company was hungry for growth, especially in the United States, and it was happy to cozy up to clients that better-­established players viewed as too damaged or dangerous. Along the way, it missed one opportunity after another to extricate itself from the Trump relationship or at least slow its expansion. With hindsight, the procession of miscues and bad decisions appears almost comical.

I have spent the past two years interviewing dozens of ­Deutsche Bank executives about the Trump relationship, among other subjects. Quite a few look back at the relationship with a mixture of anger and regret. They blame a small group of bad bankers for blundering into a trap that would further damage ­Deutsche Bank’s name and guarantee years of political and prosecutorial scrutiny. But that isn’t quite right; in fact, the Trump relationship was repeatedly blessed by executives up and down the bank’s organizational ladder. The cumulative effect of those decisions is that a German company — one that most Americans have probably never heard of — played a large role in positioning a strapped businessman to become president of the United States.

Without Deutsche Bank, Donald Trump would have been a failed real estate tycoon who ended up bankrupt and broke.  He would have been a cautionary tale of greed.

Instead he is in the White House.

That alone makes them the Holy Grail of Trump's dark secrets.