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What did an ordinary German lender have to do to realize its American investment banking dreams? Monetize the scraps. In order to compete with the biggest and most profitable firms on Wall Street starting in the 1980s, Deutsche Bank had to excel in the business that established firms didn’t want. One of those scraps was to be the future President of the United States of America, Donald J. Trump. After Trump burned most of the big banks following his wave of loan defaults from his Atlantic City casinos, nobody on Wall Street would touch him. Except Deutsche.

Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction tells the story of this tenuous financial marriage. The author David Enrich narrates the tale through some of the key characters who were instrumental in the process. While he paints Deutsche as a dysfunctional criminal enterprise (which it is), he neglects to assess the industry holistically.  There are a number of problem childs, as illustrated in another book I recently reviewed, Billion Dollar Whale (which describes Goldman Sachs’ disastrous dealings with 1MDB, the Malaysian sovereign wealth fund). Deutsche may be the leader of the pack, but the point is – there is a pack. 

Apart from the narrow assessment of the industry and at times hyperbolic targeting of Deutsche, there is oftentimes too much attention paid to Val Broeksmit, the troubled son of a former senior Deutsche employee who committed suicide. Val may have been one of the main sources for Enrich when writing the book, but there was unnecessary focus placed on his role, which in reality was more amateur private investigator than protagonist. 

What the book does get right is its highlighting of the enablers who made the Trump real estate empire possible, even when he was notorious for defaulting on loans and not paying his business partners or contractors. The book gives a vivid view into Trump’s financial situation and makes clear who owns him – Deutsche Bank. Trump has personally guaranteed to his biggest creditor $340 million, which comes due in 2023 and 2024. Overall, the book provides timely insights into a financial firm with American investment banking ambitions that was permitted by a culture of noncompliance to do business with a politically radioactive client infamous for not paying his bills or keeping his promises.    

Deutsche Bank’s Investment Banking Ambitions 

For its first twelve decades, Deutsche had been little more than a lender to German and other European companies. It had a checkered past having once banked the Nazis, but overall it was a typical lending firm that helped fund infrastructure and development projects. In other words, its business model was boring. Prior to the 1980s and 90s, Deutsche could only dream of one day becoming an investment bank that underwrote and issued securities, and engaged in secondary market trading.

The book details the siren song seduction that Deutsche, like Odysseus, succumbed to by entering the high flying sales and trading markets. At the time, these markets were dominated by firms like Lehman Brothers, Bankers Trust, and Merrill Lynch. How did Deutsche try to compete? By hiring a couple of Americans.  

Enrich does a great job humanizing this saga by delving into the stories of the salesman Edson Mitchell and derivatives guru, Bill Broeksmit. They took their trading successes from Merrill Lynch and brought them to the German lender, transforming it into a markets powerhouse. Shortly thereafter, Deutsche gained market share trading stocks, bonds, and complex financial instruments. German gave way to English as the main language spoken on Deutsche trading floors. 

The push for investment banking glory, however, was not accompanied by a culture of compliance. One scandal followed the next. From tax evasion and LIBOR, to its role in Russian money laundering, the financial crisis, and banking Jeffrey Epstein, Deutsche’s rap sheet is distinguished in an industry not foreign to them. It was this culture that drove it to serve as Donald Trump’s chief financial enabler.  

Donald Trump and a History of Unpaid Debts 

Deutsche entered into its tumultuous relationship with Trump in 1992 when it gave him a $100 million unsecured loan. Trump stopped paying, which started a trend that carried forward for the ensuing decades. Deutsche was asked to make another loan to Trump in 1998, even though Trump had recently defaulted on loans to finance his Atlantic City casinos. In those deals, he had stiffed not only the lenders, but also contractors and business partners.

Numerous Wall Street banks had suffered hundreds of millions of losses at the hands of Trump, including Citigroup, Manufacturers Hanover (JPMorgan predecessor), British lender NatWest, and Bankers Trust.  Most of the street was understandably deterred by what was known as “Donald Risk.”  

The book is filled with amazing anecdotes from this period about how bankers played to Trump’s narcissism in order to avoid him. In one example, Ace Greenberg – the head of Bear Stearns at the time – was being pressed by Trump for financing. Greenberg had it communicated to Trump that there are only four people in the world he didn’t want to be on the other side of the table from: Bill Gates, Warren Buffett, Henry Kravis, and you (i.e., Donald). Naturally, Trump could understand. 

The “Donald Risk” did not deter Deutsche Bank. The firm was trying to make its mark on Wall Street. One way to do that was to engage in the business that nobody else wanted. Hundreds of millions of loans to Trump followed. Trump would literally default in one division of Deutsche, but because the groups didn’t communicate well, he would go next door to another part of Deutsche and receive financing. The bank even conducted an informal audit of Trump’s finances at one point. He had declared at the time that he was worth $3 billion, but when Deutsche crunched the numbers, it concluded he was really worth about $788 million, which is consistent with other reports about Trump inflating his net worth. Most Wall Street banks would have run for the exits at this point, but Deutsche pressed on despite these red flags.  

Rosemary Vrablic – Trump’s Banking Enabler   

Similar to how Trump has enjoyed political enablers over the past four years, he basked in the support of financial enablers as a real estate developer. Enter Rosemary Vrablic. She was the primary relationship manager between Deutsche and Trump, which also included his extended family such as the Kushners. When rival executives caught wind of her cozying up to Trump, they attempted to block her loans. They warned he was a deadbeat and highlighted that other divisions of the bank had imposed bans on working with him. Vrablic attributed the resistance to jealousy that she had courted Trump’s business and she counted on her superiors to dismiss the internal objections. For the most part, they did.

Vrablic specialized in picking up the scraps. She excelled in handling the damaged clients that big American banks would not touch. Even after Trump refused to pay Deutsche back on its loan for his Chicago skyscraper, Vrablic found ways to provide him with more financing.  Multiple loans followed, including some $170 million to Trump Old Post Office LLC, which went towards developing Trump’s Washington D.C. hotel.  Vrablic even engineered loans for his family, including Don Jr. for a failing venture (Titan Atlas Manufacturing) and the Kushners.  Most of this recent financing that Vrablic made possible still sits on Deutsche’s books, creating serious “Donald Risk” when it comes due in the next couple of years. If history indicates anything, he’s unlikely to pay.

The Dark Towers Take

This book is an entertaining and oftentimes disturbing tale of high flying finance and a real estate con man who somehow continued to obtain financing from one firm, Deutsche Bank.  For all of the bank’s woes, however, they are not alone on Wall Street in terms of conduct and compliance pitfalls, a key fact the book ignores. Many other banks have done business with unsavory and immoral characters. Although not many of those characters become the President of the United States. 

While there was not enough focus on the financial markets industry at large, there was too much emphasis placed on Bill Broeksmit’s son, Val. His personal story is sad and unfortunate, from the way he was raised to losing his father, but this book’s audience probably does not start reading with the expectation of learning about Val’s biographical narrative. He was a key source to the book, but that should have been the extent of his involvement. Instead he was turned into a protagonist of sorts, when the primary characters – Edson, Bill, Rosemary, Donald, etc. – warranted almost all of the airtime.

What the book really succeeds at providing is timely insight into President Trump’s financial situation as he prepares to leave office. At least most recent signs point to him actually leaving. The book sheds light on the fact that Trump simply cannot afford to leave the Presidency. His debt would have been much more difficult to collect on had he remained in power for another term. Now he will become a private citizen once again, with hundreds of millions in loans that he personally guaranteed to Deutsche set to come due.  

Whether this perilous financial predicament in any way inspired Trump’s baseless claims about election fraud is up for debate. What is certain is the fact he will need liquid assets to pay his bills over the next few years. How he goes about that in a law-abiding way is anyone’s guess, but I have some predictions here. Regardless, for timely insights into Trump’s finances and the misdoings of a prominent investment bank, I recommend exploring The Dark Towers.