Until July 18th, 2015, I thought former President Donald Trump was just another skirt-chasing New York braggart. That day, I became a “never-Trumper,” because that was the day he trashed American hero John McCain. He didn’t merely disagree with McCain, he trashed him. It was ugly!
Later, after McCain died in 2018, Trump ridiculed McCain’s family for having “the world’s longest funeral.” That day, I became an “forever-never-Trumper.” Yes, policy is important, but decency is more important!
So, it is with great reluctance that I rise in his defense at the current trial in New York for defrauding numerous lenders, by giving them them unrealistically high values for his real estate properties. The motive would be to maximize the loan amount, thereby extracting more cash from the lenders.
That was standard practice in commercial real estate, where there were only two ways to access the value you create. Sell the property or borrow against it.
After graduate school, my first “semi-celebrity” loan request was from a well-known minister who wanted to buy a property for $600 thousand with a loan of $600 thousand. (In other words, he would put zero dollars of his own money into the property.) He was convinced the property (undeveloped land) was worth “at least” a million dollars. He even had an appraisal written by the seller’s appraiser for a million dollars. To him, he was simply asking for 60% loan-to-value ratio, which is very reasonable.
Of course, I needed to know whether the appraised value of one million dollars was reasonable. When I told him that we would require an independent third-party appraiser verify the value, to make sure the loan amount was not greater than the market value, he asked what was wrong with the existing appraisal by the seller’s appraiser?
I tried to explain it, until he spread his arms and asked me if “a man of God would lie to you.” Of course, I left immediately and didn’t make the loan.
My point is this: what Trump did to deceive lenders is fairly routine in commercial real estate. Of course, that doesn’t make it right – just because “everybody does it.” Lenders know that and expect that. The lenders are not dumb. They perform their own due-diligence. They know they have to protect themselves. If they didn’t, it is not the fault of the borrower.
My point is this: Of all the charges against Trump, I think this is the least important.