Democrats probing Trump, Deutsche Bank see new momentum - 9:38 AM 5/21/2019

The Finance 202: Democrats probing Trump, Deutsche Bank see new momentum

THE TICKER

The Deutsche Bank headquarters is seen behind a lamp in Frankfurt, Germany. (AP Photo/Michael Probst)

Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Finance Committee, wants to get to the bottom of Deutsche Bank loans to Trump entitites. (AP Photo/Susan Walsh)

Congressional Democrats — with new momentum in their legal fight to investigate President Trump’s conduct and records — are pressing Deutsche Bank for more information on a report that the firm ignored red flags about suspicious activity from the Trump and Kushner organizations. Trump's son-in-law Jared Kushner is now a senior White House adviser.

The development brings even more political heat to the only major financial firm willing to bank Trump over the past two decades as he suffered a series of bankruptcies and defaults — and which still holds $300 million in outstanding debt from the now-president. Deutsche Bank also faced enormous fines — $700 million in 2017 alone — for money laundering and misconduct on behalf of clients. Its shares hit a record low on Monday. 

Democrats on the Senate Banking Committee plan to press the issue with federal financial regulators at a hearing today. Ohio's Sherrod Brown, the top Democrat on the panel, and Sen. Chris Van Hollen (D-Md.) set the stage in a Monday letter to Deutsche Bank CEO Christian Sewing asking for details about events described in a New York Times report from Sunday.

That story alleges that over 2016 and 2017, Deutsche’s in-house anti-money-laundering experts recommended passing suspicious transactions involving Trump and Kushner-controlled entities along to the Treasury Department for further investigation. But executives in the bank’s private wealth management division buried the reports instead. 

Brown plans to lead off his questioning today of the Treasury Department’s top financial crimes enforcer and the FBI’s section chief for financial crimes by highlighting the report.

“We need to get to the bottom of what happened here,” Brown will say, according to a copy of his opening statement shared with The Finance 202. “Everyone has to follow anti-money laundering laws and rules — you don’t get an exemption if you have a rich and powerful client. And we have to hold financial institutions accountable if they break the rules.”

And House Financial Services Committee Chairwoman Maxine Waters (D-Calif.), who along with House Intelligence Committee Chairman Adam Schiff (D-Calif.) last month subpoenaed Deutsche Bank for records relating to its extensive dealings with Trump, did not have a comment by press time. 

Sen. Sherrod Brown, D-Ohio. (AP Photo/Julie Bennett)

Democratic lawmakers have some wind at their backs as they press their case. A federal judge on Monday blocked Trump’s bid to kill another House subpoena — this one to his accounting firm, Mazars USA, for years of his financial records. In a forceful ruling, U.S. District Judge Amit P. Mehta wrote it is “not for the court to question whether the [House Oversight and Reform] Committee’s actions are truly motivated by political considerations,” and declined a request from Trump’s lawyers to stay his order for more than seven days. 

Trump criticized the ruling: 

Trump criticizes judge in financial records case

President Trump on May 20 criticized U.S. District Judge Amit P. Mehta, who refused to block a congressional inquiry into the president’s financial records. (The Washington Post) 

A federal judge in Manhattan could follow suit Wednesday when he holds a hearing on a similar attempt by the Trump team to block House subpoenas of Deutsche Bank and Capital One. Trump’s lawyers have made the same argument there that fell short in the Mazars case: That Democratic lawmakers behind the document demands are motivated by improper political considerations. 

(Still, House Democratic leaders are divided over how, broadly, to approach attempting to hold Trump to account. Speaker Nancy Pelosi (D-Calif.) faced down a number of her lieutenants eager to begin impeachment proceedings in a heated Monday night meeting, after the White House blocked former counsel Don McGahn from testifying to the House.)

The New York Times report prompted an angry response from Trump on Monday — but not over the story’s central claim that Deutsche Bank overlooked potentially shady transactions involving Trump entities. He bristled rather at the story’s statement that the German bank has been the only major financial firm willing to extend him credit: 

The New York Times reporter who wrote the Deutsche Bank piece challenged Trump's claim: 

Trump's tweet thread belongs to a tradition of defensive comments about his net worth, as The Post's Catherine Rampell points out. "One theory is that, maybe, if Trump’s tax returns or other financial records become public, his supporters would learn that he’s not nearly as rich as he says,” she writes. “Another is that his finances are not exactly on the up and up. Of course, both explanations could be true.”

For its part, Deutsche Bank released a statement Monday denying the Times report. “At no time was an investigator prevented from escalating activity identified as potentially suspicious. Furthermore, suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false,” the bank said. 

It’s worth noting, however, that the whistleblower at the heart of the Times story never made the first claim the denial addresses. Rather, she says, she presented her best case for submitting a report to Treasury on the suspicious activity she uncovered, but senior executives with the bank’s private banking division decided against her recommendation.

Now, Congressional Democrats intend to pick up where those executives left off.