The real reason Donald Trump suddenly had all that cash
On May 5, 2018, The Washington Post published an excellent piece, “As the ‘King of Debt,’ Trump borrowed to build his empire. Then he began spending hundreds of millions in cash.” In the column, it addresses the shift in Donald Trump’s approach to investments and using debt. It opens:
“It shows that Trump had access to far more cash than previously known, despite his string of commercial bankruptcies and the Great Recession’s hammering of the real estate industry.
“Why did the ‘King of Debt,’ as he has called himself in interviews, turn away from that strategy, defying the real estate wisdom that it’s unwise to risk so much of one’s own money in a few projects?
“And how did Trump — who had money tied up in golf courses and buildings — raise enough liquid assets to go on this cash buying spree?”
The column reports that in the nine years before running for president, Trump spent more than $400 million “in cash on new properties” and points to two points in time when the significant expenditure of cash began- 2006, with the purchase of the estate in Scotland, and in 2014, when he really started spending a ton of cash on properties. Eric Trump, President Trump’s son, explained the expenditures on cash flows from existing properties and businesses this way:
“He had incredible cash flow and built incredible wealth. He didn’t need to think about borrowing for every transaction. We invested in ourselves. It’s a very nice luxury to have.”
The first question that must be asked is, why was that not the case prior to 2006 and especially before 2014? As the column indicates, at the same time, Trump was still obtaining significant loans for his businesses. Deutsche Bank loaned close to $300 million to Trump for various projects.
Those who have worked for Trump in the past all expressed surprise at his turning to cash. Maybe the Trump kids joining his business in the mid to late 2000s is the reason for the change in philosophy. Two other timings may be coincidences- around the time of the significant spending in 2006, Michael Cohen joined the Trump Organization and in 2013, Trump traveled to Russia for Miss Universe. Recall also that Donald Trump, Jr. in 2008 made comments about the inflow of cash from Russia and the Trumps’ reliance on Russian cash. The Cohen investigation and Mueller’s Russia investigation may eventually disclose to the world the way in which the “King of Debt” Trump became the “King of Cash.”
Daniel is a lawyer writing and teaching about SCOTUS, and is the author of the book “The Chief Justices” about the SCOTUS as seen through the center seat.