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Donald Trump ordered new sanctions on Thursday that open the door wider to blacklisting people and entities doing business with N. Korea, including its shipping and trade networks, further tightening the screws on its nuclear and missile program.
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Trump launches tweetstorm against Kim Jong Un, Rand Paul, ‘Russia hoax’
“The Russia hoax continues, now it’s ads on Facebook. What about the totally biased and dishonest Media coverage in favor of Crooked Hillary?” Trump tweeted, just hours after Facebook CEO Mark Zuckerberg said the social media network would hand over …
President Trump labels Russia investigations a “hoax”
WASHINGTON (AP) — President Donald Trump is continuing to dismiss investigations into Russian interference in last year’s U.S. election as a “hoax,” as Russian-purchased Facebook advertising comes under scrutiny. Trump says on Twitter Friday: “The …
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President Trump labels Russia investigations a ‘hoax’
President Donald Trump listens during a luncheon with South Korean President Moon Jae-in and Japanese Prime Minister Shinzo Abe, at the Palace Hotel during the United Nations General Assembly, Thursday, Sept. 21, 2017, in New York. (AP Photo/Evan …
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His finely-painted cast of characters includes a rookie F.B.I. agent hungry to make his name, a Texas cowboy fighting to keep his family business afloat and a talented Mexican horseman picking winners for a very dangerous boss. Tone weaves the threads …
Before the start of business, Just Security provides a curated summary of up-to-the-minute developments at home and abroad. Here’s today’s news.
North Korea could detonate a hydrogen bomb over the Pacific Ocean in response to Trump’s speech to the U.N. General Assembly, North Korea’s Foreign Minister Ri Yong-ho said yesterday, after Trump’s speech singled out the country as a global threat that could be “totally” destroyed by the U.S. if forced to defend itself or its allies. Jonathan Cheng reports at the Wall Street Journal.
“We cannot deny the possibility it may fly over our country,” Japan’s Defense Minister Itsunori Onodera said today after North Korea threatened to test a hydrogen bomb in the Pacific Ocean. Justin McCurry and Julian Borger report at the Guardian.
A “mentally deranged U.S. dotard,” the North Korean leader Kim Jong-un said of Trump today in a statement carried by the state K.C.N.A. news agency, directly responding to Trump’s U.N. speech and promising to institute the “highest level of hard-line countermeasure in history” against the U.S. – the specific action that would be taken was not explained by Kim or foreign minister Ri. Choe Sang-Hun reports at New York Times.
“I will make the man holding the prerogative of the supreme command in the U.S. pay dearly for his speech,” Kim also said in the statement, adding that Trump would “face results beyond his expectation” and that he would “tame” the president “with fire.” David Nakamura and Anne Gearan report at the Washington Post.
Kim’s statement was the first time a North Korean leader has made a direct address to an international audience, according to experts, and the statement was made hours after the North Korean delegation arrived in New York for the General Assembly, the BBC reports.
The full text of Kim’s statement is provided by the New York Times.
Trump signed an executive order giving the Treasury Department the power to expand sanctions against North Korea yesterday, including the possibility of leveling sanctions against individuals and companies associated with the regime, to freeze the U.S. assets of foreign banks working with the country and to ban those banks for accessing U.S. financial markets, Trump stating that “foreign banks will face a clear choice: doing business with the United States or facilitate trade with the lawless regime in North Korea.” Ian Talley and Louise Radnofsky report at the Wall Street Journal.
The executive order came amid reports that China had instructed its banks not to do new business with North Korea and to wind down old loans, in accordance with the U.N. Security Council resolutions. Peter Baker and Somini Sengupta report at the New York Times.
Treasury Secretary Steven Mnuchin confirmed yesterday that he notified China’s central bank about the forthcoming sanctions, adding that the Treasury would consider designating entities on a “rolling basis.” Ali Vitali reports at NBC News.
The five key points about the U.S. sanctions against North Korea are provided by Jonathan Easley and Rebecca Kheel at the Hill.
“We urge the D.P.R.K. not to go further along a dangerous direction,” China’s Foreign Minister Wang Yi said yesterday in his speech to the U.N. General Assembly, using the acronym for the official name of North Korea, the Democratic People’s Republic of Korea, also calling on “all parties to play a constructive role in easing tensions.” Reuters reports.
The ambassadors of E.U. member states reached an initial agreement on imposing more sanctions on North Korea, E.U. officials and diplomats said yesterday; if accepted by E.U. foreign ministers, the measures would go further than the latest U.N. Security Council sanctions. Robin Emmott reports at Reuters.
The response to the North Korea threat requires creativity, strategists should begin by assuming that economic sanctions would not work and be prepared to think outside the box. David Ignatius suggests looking at military options, intelligence strategies, defensive measures and other actions at the Washington Post.
A profile of North Korean Foreign Minister Ri Yong-ho is provided Anna Fifield at the Washington Post.
The Trump administration has been grappling with its approach to the 2015 Iran nuclear deal, officials having mapped out several scenarios, while Secretary of State Rex Tillerson and other officials have continued to urge Trump to certify Iran’s compliance to Congress by the Oct. 15 deadline – although Trump said Wednesday that he had already made a decision on the deal, which he did not reveal. Felicia Schwartz reports at the Wall Street Journal.
“Are you prepared to return to us 10 tons of enriched uranium?” Iran’s Foreign Minister Javad Zarif asked yesterday, stating that Iran would only discuss changing the nuclear deal if every concession Iran has made were reconsidered, adding that the Trump administration sought to extract further concessions from Iran without making any itself. David E. Sanger and Rick Gladstone report at the New York Times.
Top diplomats from Germany, Russia, China and Italy defended the Iran nuclear deal yesterday at the U.N. General Assembly, warning that reneging on the agreement would undermine future disarmament efforts and regional and global security. John Daniszweski and Matthew Lee report at the AP.
The use of unilateral sanctions against Iran “is illegitimate and undermines the collective nature of international efforts,” Russian Foreign Minister Sergei Lavrov said in his speech to the U.N. yesterday. Reuters reports.
Iran unveiled its latest ballistic missile during a military parade in Tehran today, defying Trump who has tried to restrict Iran’s ballistic missile program, the AP reports.
The frequent breakdown of uranium enrichment devices have inadvertently helped to keep Iran within the limits of the nuclear deal, a report by the Institute for Science and International Security said today, adding that stricter monitoring of the deal by the Trump administration was also helping to ensure compliance. Jonathan Landay reports at Reuters.
Trump should withdraw the U.S. from the nuclear deal, forty-five former intelligence, national security and defense officials urged in a letter to the president yesterday, calling on the president to de-certify Iran’s compliance by the Oct. 15 congressional deadline. Ellen Mitchell reports at the Hill.
Facebook agreed yesterday to hand over information to congressional investigators about Russian activity on its platform during the 2016 presidential election, with the Facebook C.E.O. Mark Zuckerberg stating that he cares “deeply about the democratic process and protecting its integrity.” Scott Shane and Mike Isaac report at the New York Times.
Facebook’s decision came after pressure from lawmakers and the public and amid the growing evidence that Russian accounts posed as U.S. activists to spread pro-Trump propaganda. Craig Timberg, Carol D. Leonnig and Elizabeth Dwoskin report at the Washington Post.
Sen. Chuck Grassley (R-Iowa) sent a letter to F.B.I. Director Chris Wray asking if the F.B.I. had given “defensive briefings” or similar warnings to Trump officials about “potential connections between campaign officials and the Russian government” on Wednesday. Jordain Carney reports at the Hill.
Democratic senators praised Facebook’s decision to release the information, but argued that further steps should be taken to understand the extent of Russian interference in the election. Nancy Scola, Josh Dawsey and Ali Watkins report at POLITICO.
Sens. Amy Klobuchar (D-Minn.) and Mark Warner (D-Va.) have called on their colleagues to sponsor legislation enhancing transparency of online political advertisements, including requiring digital platforms to keep the records of groups or individuals who make ads of more than $10,000. Dylan Byers reports at CNN.
A breakdown of contacts between Trump campaign associates and Russian-linked individuals is provided by Philip Bump at the Washington Post.
Any attempts by the U.S.-backed Syrian Democratic Forces (S.D.F.) to open fire would be “immediately suppressed with all military means,” a spokesperson for the Russian military, Maj. Gen. Igor Konashenkov said yesterday, raising the possibility of direct interaction between the U.S.-backed forces and Russia and Iran-backed Syrian government forces. David Filipov and Liz Sly report at the Washington Post.
U.S. and Russian military generals met face-to-face this week to discuss a Russian airstrike on the S.D.F. on Saturday, the U.S. spokesperson for the U.S.-led coalition Col. Ryan Dillon said yesterday, adding that the discussions emphasized the need for communication to prevent “accidental targeting or other possible frictions” that would distract from the fight against the Islamic State group. Rebecca Kheel reports at the Hill.
Turkey will deploy troops to Syria’s northern Idlib region as part of the “de-escalation” zones agreed by Turkey, Russia and Iran, the Turkish President Reçep Tayyip Erdogan said yesterday. Parisa Hafezi reporting at Reuters.
U.S.-led airstrikes continue. U.S. and coalition forces carried out 15 airstrikes against Islamic State targets in Syria on September 20. Separately, partner forces conducted eight strikes against targets in Iraq. [Central Command]
The Iraqi military’s offensive to recapture the town of Hawija launched yesterday comes amid increased tensions as the Iraqi Kurdish Regional Government prepares to hold an independence referendum on Sept. 25, Ben Kesling and Ghassan Adnan report at the Wall Street Journal.
Nations in the Middle East and across the world have been united in their opposition to the Iraqi Kurdistan independence referendum, fearing the consequences of an independence vote for Iraq and the region. David Zucchino reports at the New York Times.
The U.N. Security Council yesterday voted unanimously to establish an investigative team to help Iraq collect evidence against Islamic State extremists and build potential war crimes cases, the UN News Centre reports.
Trump should overturn an Obama-era policy that restricts aid to Iraq’s religious minorities, Nina Shea writes at the Wall Street Journal.
TRUMP ADMINISTRATION FOREIGN POLICY
The Trump administration is preparing to relax the limits on drone strikes and commando raids imposed by the Obama administration, according to officials familiar with the matter, the measures focusing on two rules: the targets of kill missions and the level of vetting required for proposed drone attacks and raids. Charlie Savage and Eric Schmitt report at the New York Times.
The Trump administration’s potential drone strike policy demonstrates which elements of Obama’s approach have been institutionalized and affirmed, but also raises concerns about the threshold required to authorize strikes, among other issues. Luke Hartig provides an analysis at Just Security.
French President Emmanuel Macron has taken on the burden of convincing Trump to change his mind on an array of different topics, including the Iran nuclear deal and the Paris climate change agreement. Roger Cohen explains at the New York Times.
U.N. GENERAL ASSEMBLY
Secretary of State Rex Tillerson called on the international community to stop the spread of nuclear weapons at a ministerial meeting of the U.N. Security Council yesterday. Edith M. Lederer and Jennifer Peltz report at the AP.
Russian Foreign Minister Sergei Lavrov praised Trump’s unequivocal statement on the “primacy of sovereignty” at the General Assembly yesterday. The UN News Centre reports.
The U.N. General Assembly has been a parade of hypocrisy with leaders praising their own actions but “doing so little to tackle humanitarian crises they themselves have helped create,” Nicholas Kristof writes at the New York Times.
THE TRUMP ADMINISTRATION
“No, I do not,” the U.S. ambassador to the U.N. Nikki Haley said yesterday in response to a question about her interest in being Secretary of State, making the comment amid speculation about the future of Secretary of State Rex Tillerson. Nahal Toosi explains at POLITICO.
Nikki Haley has been a prominent figure at the U.N. General Assembly this week, highlighting her growing influence and ambition, particularly in comparison to the increasingly marginalized Tillerson. Anne Gearan and David Nakamura write at the Washington Post.
The more than $70bn that the U.S. has invested in the Afghan security forces has been undermined by persistent problems and poor planning, according to a report released yesterday by the Special Inspector General for Afghanistan Reconstruction. Nancy A. Youssef reports at the Wall Street Journal.
President Trump and Afghan President Ashraf Ghani agreed that U.S. companies could develop the country’s rare earth mineral reserves during a meeting yesterday. Reuters reports.
The former Afghan President Ashraf Ghani castigated Trump’s Afghanistan strategy in an interview with Ruchi Kumar at Foreign Policy.
Afghans are encouraged by Trump’s strategy and are cautiously optimistic about his conditions-based approach that also provides for more training and support for Afghan security forces. Parwiz Kawa and Shafi Sharifi write at the Wall Street Journal.
Polish and N.A.T.O. troops began military exercises in Poland yesterday, following the large-scale military exercises recently held by Russia and Belarus which caused concern among N.A.T.O. allies. The AP reports.
Bahrain’s King Hamad bin Isa Al Khalifa believes the Arab boycott of Israel should end, two prominent U.S. Rabbis revealed yesterday, reflecting the slowly warming relationship between Arab nations and Israel due to shared concerns in the Middle East. Jon Gambrell reports at the AP.
Pentagon Discloses Meeting With Russian Military To Prevent Accidental Clashes In Syria
“According to our information, U.S. intelligence services initiated the offensive to halt the successful advance of government troops to the east of Deir al-Zor,” RussianColonel-General Sergei Rudskoi was quoted as saying by Reuters. Prior to that …
Russia says will target US-backed fighters in Syria if provokedReuters
Is Russia preparing to ATTACK US troops in Syria? Moscow warns it will target areas held by US Special Forces if the …Daily Mail
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For many years, Deutsche Bank has been among the largest lenders to the real estate empire of Donald Trump. Now that Trump is US president, this relationship has been generating scrutiny – in part because Deutsche has a number of outstanding regulatory issues to resolve with the US federal government.
One of those issues is a Department of Justice investigation into the bank’s role in a Russian “mirror-trading” scheme that allowed some Russian oligarchs to trade rubles for dollars and thereby funnel money out of Russia. This was a money-laundering scheme designed, in part, to allow oligarchs with close ties to the Kremlin to dodge sanctions imposed on them by the US in the wake of the 2014 Ukraine crisis.
This investigation has nothing to do with Trump – he is not alleged to have had any role in the activities being investigated – but the fact that he is president means that any decisions taken by US federal regulators about Deutsche will provoke questions about conflicts of interest, according to Norman Eisen, who was ethics counsellor in the Obama White House, in a recent interview with the Financial Times (FT).
“Whether it’s the investigation, the regulatory climate [or] a hundred other ways that Deutsche Bank is affected by the federal government, if they have this leverage over Donald Trump now, having seen how he operates, I think it’s entirely legitimate to question whether he’ll be even-handed,” Eisen told FT.
Potential conflict of interests
One might note that it’s also legitimate to question whether a former official in the Obama White House like Eisen will be even-handed in commenting on Donald Trump’s business affairs. Moreover, the Justice Department is headed by Attorney General Jeff Sessions, not by Donald Trump, so any top-level guidance on how the department should approach its Deutsche Bank file would therefore come from Sessions.
However, Sessions has already come under fire from Trump for what the president sees as Sessions’ insufficient loyalty. This has generated Beltway speculation that if Trump were to quietly ask Sessions to go easy on Deutsche, Sessions would have an incentive to go along, in order to avoid further stoking the ire of his mercurial boss.
Trump’s financial disclosure data
According to documents called Financial Disclosure Reports submitted by Trump to the US Office of Government Ethics, which published the documents in June, Trump owns assets worth billions of dollars within a portfolio of 565 companies. He also had substantial debts – totaling at least $315 million (266 million euros) – in connection with several real estate projects. Most of that money was owed to Deutsche Bank.
According to FT’s article, “Deutsche declined to comment on legal matters, the structuring of its loans, the nature of the guarantees or its relationship with Mr Trump. Spokespeople for the Trump Organization did not respond to emails.”
However, FT was able to interview other people who had familiarity with the long-standing relationship between Trump and Deutsche Bank.
A match made in developer heaven
According to FT, when Trump was looking for money to finance his real estate ventures in the mid-1990s, he “found a good match in Deutsche,” because the bank wanted to grow in the US and saw a niche in lending to rich developers who had “hit a few bumps along the way,” such as Harry Macklowe, Ian Bruce Eichner and Donald Trump.
Deutsche Bank is one of the world’s biggest banks, with nearly 100,000 employees world-wide. Since 1990, it has had a substantial presence in the UK and US, in part because of its 1989 takeover of London-based investment bank Morgan, Grenfell & Co. and its 1999 takeover of New York-based Bankers Trust.
FT identified some of the New York-based Deutsche bankers who had important relationships with Trump over the years as Jon Vaccaro, who joined Deutsche from Citibank in 1997; Mike Offit and Steve Stuart, who joined from Goldman Sachs; and Eric Schwartz, who joined from Moody’s, and became Trump’s primary contact person at Deutsche for several years.
Some of the financing deals the Trump organization made with Deutsche are still active. There is a loan connected to the Old Post Office building in Washington, D.C., and another on a Chicago hotel tower (pictured at top), both due for repayment in 2024. And there’s a $50 million mortgage on the Doral golf resort in Miami, due in 2023.
The dark art of insinuation
Maxine Waters, a Democratic Party congresswoman from Los Angeles, is determined to make Trump’s relationship with Deutsche Bank a political issue. As the ranking Democratic member of the House Financial Services Committee, in a letter to Deutsche Bank in May, she called for Deutsche to turn over financial records relating to Trump, his close family members and business associates, so that the committee can examine them for possible links between Moscow and Trump’s businesses.
This has nothing to do with the separate investigation of Russian oligarchs’ mirror trades via Deutsche, cited above. Instead, it’s connected to the steady drumbeat of allegations by US politicians opposed to Trump that the Kremlin “interfered with the US presidential election” in unspecified ways, in order to increase the likelihood of the real estate mogul being elected.
Deutsche has refused to supply its clients’ financial records, saying it must respect “laws and internal policies designed to protect confidential customer information.”
This week’s FT article, entitled “Donald Trump’s debt to Deutsche Bank,” makes no allegations of wrong-doing in connection with any of Deutsche’s loans to Trump or his companies. Nor does Congresswoman Waters’ letter to Deutsche Bank – at least, not directly.
Guilt by association?
However, in politics, perception often trumps substance. By issuing calls for any Russia-related documents to be released by Trump’s bankers, Waters and other opponents of Trump may be seeking to awaken an impression that Trump’s dealings with Deutsche Bank may have involved some impropriety.
Generating this impression may be made easier by the fact that Deutsche Bank – like many other major banks in the US and Europe – has had a long series of scandals connected to illegal financial dealings over the past two decades, for which it has had to make payments of billions of dollars to regulators, and suffered well-deserved reputational damage.
Waters’ letter to Deutsche Bank, which was co-signed by four other members of the House Financial Services Committee, puts it this way: “Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the president, and its repeated violations of US banking laws, all raise serious questions about whether the bank’s reported reviews of the trading scheme and Trump’s financial ties to Russia were completely thorough.”
When Donald Trump sued Deutsche Bank in late 2008, it was “classic Trump”, according to the German bank, which sued him back.
The New York property developer was trying to wriggle out of $40m of personal guarantees he had supplied on a $640m loan to build Trump International Hotel & Tower in downtown Chicago. The Lehman Brothers crisis was an unimaginable event that should get him off the hook, he argued. The future US president sought damages of $3bn — because the Deutsche-led consortium of lenders had just played a part in wrecking the world economy.
The two sides sparred for a while before settling out of court. And within a couple of years Deutsche was back as Mr Trump’s go-to lender, continuing a relationship that has endured for decades, even as other big banks have deserted the litigation-prone developer.
In June, Mr Trump disclosed outstanding loans from Deutsche of at least $130m, secured against properties in Miami and Washington in addition to the condominium-hotel in Chicago. The total is likely to be about $300m, according to people familiar with his borrowings.
“Deutsche seem to come through for him on a pretty regular basis,” says a person involved in the refinancing of the General Motors Building in Manhattan, one of the bank’s breakthrough US deals with Mr Trump, in the late 1990s.
“They stepped into a void,” says another restructuring expert.
Deutsche Bank financings for Donald Trump
Trump International Hotel & Tower, Chicago
Loan value: $25m-$50m
Rate: Libor plus 2 per cent or prime minus 0.5 per cent
Mr Trump built one of the tallest towers in the US on the site of the former Sun-Times Building, overlooking the Chicago River. It was opened in January 2008.
Old Post Office, Washington
Loan value: over $50m
Rate: Libor or prime plus 2 per cent
Four years ago Mr Trump took a 60-year lease on the ornate Old Post Office, close to the White House. After a $100m refit, the 263-room Trump International Hotel was opened last September
Trump National Doral, Miami
Loan values: over $50m; $5m-$25m
Rate: Libor plus 1.75 per cent or prime minus 0.75 per cent
In February 2012 Mr Trump bought the golf resort at a knockdown price from hedge fund tycoon John Paulson, who had taken control of the property from a Morgan Stanley fund.
(Source for all loans: Filings by Mr Trump to the Office of Government Ethics)
But the elevation of the Queens-born developer to the presidency has cast a new complexion on the relationship. Deutsche faces various legal proceedings in the US, including an investigation by the Department of Justice into a Russian money-laundering scheme for which the bank paid about $600m of fines to other regulators in January. It is also facing a probe by the DoJ into whether Deutsche’s traders, and those of other banks, manipulated the prices of US Treasuries.
Separately some Democrat lawmakers are seeking records from Deutsche to see whether there are any financial links between Russia and Mr Trump.
The guarantees that Mr Trump provided over a portion of the outstanding loans, which do not mature for another six or seven years, could add a further complication to relations with Deutsche. If the loans default, the Frankfurt-based bank could in theory go after Mr Trump’s other assets. In December Alan Garten, general counsel of the Trump Organization, told Bloomberg that the guarantees were not a long-term problem, because the loans were structured to ultimately become standard debt backed by property.
Deutsche declined to comment on legal matters, the structuring of its loans, the nature of the guarantees or its relationship with Mr Trump. Spokespeople for the Trump Organization did not respond to emails.
The entanglements raise serious questions over conflicts of interest, says Norman Eisen, ethics chief in the Obama White House, and chairman of Citizens for Responsibility and Ethics in Washington. In January the bipartisan pressure group sued Mr Trump over alleged violations of the constitution’s foreign emoluments clause; oral arguments are set for October.
“Whether it’s the investigation, the regulatory climate and a hundred other ways that Deutsche Bank is affected by the federal government, if they have this leverage over Donald Trump now, having seen how he operates, I think it’s entirely legitimate to question whether he’ll be even-handed,” says Mr Eisen. “It is a source for concern.”
When Mr Trump was looking for capital in the mid-1990s, he found a good match in Deutsche. The German bank, dominant in its domestic market, was desperate to grow in the US. In particular, the bank saw a niche in serving rich developers who had hit a few bumps along the way, such as Harry Macklowe and Ian Bruce Eichner, both celebrated owners and losers of New York real estate.
Such clients were a “perfect fit”, says one former Deutsche banker. The field was relatively clear, as many US and Japanese banks burnt by losses from the early 1990s downturn gave them a wide berth. In addition, the bank could sell them extra services through its private-client business, which was bolstered by the 1999 acquisition of Bankers Trust.
“Sometimes a business will look at a client who can’t do business elsewhere,” says another former Deutsche managing director. “It makes the overall picture economic.”
A client like Mr Trump would be offered a choice of terms, according to a person familiar with the deals: an interest rate of, say, Libor plus 500 basis points with a guarantee, or Libor plus 800 without.
Deutsche’s key recruit was Jon Vaccaro from Citibank, who arrived as global head of commercial real estate in 1997. Other important figures for Mr Trump, over the years, were Mike Offit and Steve Stuart, a duo who joined from Goldman Sachs, and Eric Schwartz, a recruit from Moody’s who became the developer’s primary point of contact.
Some of the appointments gave Deutsche more clout in boardrooms and on the party circuit. Tobin “Toby” Cobb, formerly of Donaldson, Lufkin & Jenrette, is the son of two US ambassadors. Justin Kennedy, a trader who arrived from Goldman to become one of Mr Trump’s most trusted associates over a 12-year spell at Deutsche, is the son of a Supreme Court justice. Mr Cobb, Mr Kennedy, Mr Stuart and Mr Offit could not be reached for comment. Through a spokesperson, Mr Schwartz and Mr Vaccaro declined to comment.
Deutsche’s big real estate push came against the backdrop of rapid growth in the commercial mortgage-backed securities (CMBS) market, which allowed the bank to lay off much of the default risk to outside investors.
The market had got going in the early 1990s, as banks blanched at lending without personal guarantees. But developers did not generally want to give them. The solution was often a non-recourse loan that the banks could package into CMBS for a fee. Deutsche became a keen underwriter.
CMBS issuance exploded between 1997, when the total US market was worth about $37bn, and 2007, when it peaked at $229bn.
Former executives in Deutsche’s commercial real estate business say they were given the freedom to develop their business. Neither Josef Ackermann, a Swiss banker who became the bank’s first non-German chief executive in September 2002, or Anshu Jain, who succeeded him as co-chief executivein 2012, tightened the reins, says one former employee. “The organisation was very fractured.” Mr Ackermann and Mr Jain declined to comment.
“Deutsche’s culture in New York and London is more of a conglomeration of outsiders versus homegrown talent, and sometimes they’re at odds with each other,” says David Hendler, an ex-Wall Street bank analyst who now runs Viola Risk Advisors.
A couple of decades earlier, before Deutsche began its expansion and while Mr Trump was still making a name for himself in New York real estate, plenty more banks were willing to deal with Mr Trump. Citibank, for example, led deals including the Trump Plaza, the largest casino in Atlantic City at the time, and Trump Shuttle, an east coast airline the developer launched in 1989. Manufacturers Hanover, bought by Chemical Bank in 1991, and Chemical, which bought Chase Manhattan in 1996 and took the name, also took part in several deals, along with Bankers Trust.
“He put out good product,” remembers one ex-Deutsche banker. “His buildings were high-quality, he got good rents from retail and he sold condos for high prices.”
Steve Witkoff, chairman and chief executive of the Witkoff Group, a luxury condo developer who considers himself a friend of Mr Trump, adds: “I think he is one of the best out there.”
But things changed in 1990, when Mr Trump overextended himself in Atlantic City through bank loans and junk bonds, while suffering with the rest of the industry in a New York property downturn. One warning sign was a $100m working-capital loan from Bankers Trust: Mr Trump was using it to service mortgages and pay debt, rather than fund day-to-day operations, according to a person familiar with discussions. Before long, the four lead banks — Citi, Chemical, ManiHani and Bankers Trust — sat down on behalf of 68 other lenders to thrash out a restructuring of $4bn of debt, including $800m of guarantees.
Mr Trump lost control of wide swaths of his empire and the banks took “significant” hits on their investments, according to the person familiar with the talks.
The experience convinced a lot of banks that lending to Mr Trump was more trouble than it was worth. Neither Citi nor Chase, for example, has lent to Mr Trump since the big debt restructuring of the early 1990s, according to syndicated loan data tracked by Dealogic. Both banks declined to comment on their relationships with Mr Trump.
After Mr Vaccaro left in 2010 for Cantor Fitzgerald, via a brief stint at Ranieri Partners, Deutsche’s commercial real estate business was taken over by Jonathan Pollack, now at Blackstone, then Matt Borstein in 2015. But by then, the primary point of contact for Mr Trump was Rosemary Vrablic, his long-time wealth manager who had joined Deutsche’s private banking unit in 2006 from Merrill Lynch.
In 2013, when Mr Trump was bidding for a 60-year lease to redevelop the Old Post Office building in Washington, he turned to his friend Tom Barrack, a real estate mogul who spoke at the Republican National Convention last year on behalf of candidate Trump, to provide the initial financing.
A year later, when the financing was coming due, the Trump Organization swapped out Mr Barrack’s part of the deal and turned again to Deutsche. The bank supplied a $170m loan via its private banking unit, which houses Ms Vrablic’s business, according to filings made with Washington DC’s Office of Tax and Revenue.
Loans for the Old Post Office building and Chicago hotel tower are not due until 2024, when Mr Trump would be in the final year of a second term in the White House, if re-elected. The $50m-plus mortgage on the Doral golf course resort in Miami, comes due in 2023.
John Cryan, Deutsche’s chief executive since 2015, has been trying to put an end to the bank’s slew of legal and regulatory troubles in the US. Last December the bank struck a $7.2bn settlement with the DoJ for mis-selling residential mortgage-backed securities in the run-up to the crisis; in April it became the first big bank to be penalised for violations of the Volcker ban on proprietary trading.
The chief executive assured investors last month that Deutsche had made “significant progress” on its remaining slate of investigations.
Maxine Waters, however, a Democratic congresswoman representing Los Angeles, is determined to keep the bank in regulators’ crosshairs. As the ranking member of the House financial services committee, she is demanding a broad range of financial records from Deutsche, to look for links between Moscow and Mr Trump, his close family members, business associates and others he has dealt with in the past. Deutsche has refused to supply the materials requested, saying it must respect “laws and internal policies designed to protect confidential customer information”.
In July, after two failed attempts to obtain records from Deutsche, Ms Waters and three Democratic colleagues brought a resolution to the floor of the Capitol building to compel the Treasury Department’s financial crimes enforcement network to turn over documents.
The Democrats are seeking documents, records and any suspicious activity reports referencing loans the bank extended involving Bayrock, a developer in several real estate deals including the Trump SoHo hotel, and several Russian banks, including Sberbank, Vnesheconombank Group and VTB Group.
The resolution was voted down on party lines. But Ms Waters’ face is one of a dozen images that flash across the screen showing the “enemies” of the president in an ad released this month by a campaign for his re-election.
The congresswoman is right to keep up the pressure, says Mr Eisen. “The pending investigation, the regulatory issues . . . the potential leverage as these loans come due, all of these issues demonstrate why a president should not maintain his active business interests when he steps into the White House.”
Throughout the election, the media obsessed over a “Hillary Clinton email scandal” that ultimately never existed, as the FBI ended up fully exonerating her from any legal wrongdoing. Donald Trump spent the general election dishonestly exaggerating Hillary’s emails. Now, in what might finally bring the true definition of irony into the 2016 election saga, Trump and Paul Manafort may both end up being taken down in their Russia scandal due to email.
The latest revelation is that Paul Manafort offered to give a Russian oligarch regular briefings about the status of the Donald Trump campaign, which he was running at the time (link). More specifically, Manafort used his official Trump campaign email account to make this offer to Russia. This means there’s an incriminating record of the entire thing. It also hints at Trump’s own role in, and knowledge of, Manafort’s interactions with the Russians.
Trump may end up having to rely on an ignorance defense, in which he claims that he had no idea his own campaign chair Manafort was colluding with the Russians under his nose. But if Manafort had been trying to do this without Trump’s knowledge, he’d have been likely to avoid using his official campaign email account. The technical people running the Trump campaign email system could have spotted Manafort’s emails and made Trump aware of it. Manafort would have known about this possibility. Thus his decision to use his campaign email strongly suggests that he didn’t care about Trump finding out – because he had already told Trump about it anyway.
At the least, this gives Special Counsel Robert Mueller reason to steer his investigative activities under the presumption that Manafort told Trump about the arrangement at some point. Mueller simply has to find a record that proves it, perhaps in Manafort’s wiretapped phone calls with Trump. In the end, Manafort’s activity on a Trump email account may be what leads to their downfall.
The post Irony alert: Donald Trump and Paul Manafort may be taken down by new email scandalappeared first on Palmer Report.
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In some respects, experts say, German elections are insulated from outside interference in ways those in the United States are not. The country’s politics are not as polarized as they are in the United States, where partisan enmity provided fertile ground for Russian efforts to sow confusion with distorted and falsified information amplified by Russian-controlled Twitter bots and Facebook accounts.
In a move that would seem unimaginable in the United States, the campaigns for the major political parties entered into a “gentleman’s agreement” this year not to exploit any information that might be leaked as a result of a cyber attack.
Germans also still largely trust their mainstream, traditional news media sources and, unlike Americans, tend to be wary of information disseminated on Facebook and Twitter.
Officials warn that there is still a chance that some 16 gigabytes of sensitive information stolen two years ago by Kremlin-backed hackers from Germany’s Parliament, the Bundestag, could surface, much like emails taken from the campaign of Emanuel Macron were dumped days before the election in France.
In January, someone registered two websites, btleaks.info and <a href=”http://btleaks.org” rel=”nofollow”>btleaks.org</a>, which reminiscent of the DCLeaks website that served as a repository for documents stolen from the Democratic National Committee last year. Staffers from Germany’s domestic intelligence agency have been assigned to check those websites hourly.
But few think the information if leaked would make much difference at this point. The latest polls show Ms. Merkel in a comfortable lead ahead of her chief rivals, making it likely that she will secure a fourth term as chancellor.
So why has Russia held back?
After failing to defeat Mr. Macron or so far obtain any positive dividends from its support of the Trump campaign, it is possible, experts say, that the Kremlin has decided to rethink its approach.
Russian influence operations, or active measures as they are known, tend to work only if no one is expecting them. Unlike the Obama administration, which chose to remain silent about Russia’s meddling for months before the election last November, German officials cannot seem to stop talking about the threat.
Weeks after the election of President Trump, Bruno Kahl, the head of Germany’s foreign intelligence service, the BND, warned of cyber attacks aimed at “delegitimizing the democratic process” in Germany. Ms. Merkel herself has issued similar warnings.
“It makes absolutely no sense to conduct cyber ops because everyone is waiting for it,” Dr. Gaycken said. “It would almost make more sense for the C.I.A. to leak fake news to make it seem like the Russians did it.”
Ripjar, a data analytics company founded by former members of Britain’s Government Communications Headquarters, says that scores of automated bots on Twitter and other social media sites have been pushing anti-Merkel and anti-immigrant messaging in German. The messages appear to align with Kremlin positions ahead of the election, but do not seem to have had much resonance.
“It is a very blunt tool that I would assess has very little impact on the world,” said David Balson, Ripjar’s director of intelligence.
Perhaps Germany’s greatest protection is not some 21st century innovation but old-fashioned paper ballots, counted by hand, that are essentially hack proof.
It would be a mistake to think the aggressive Russian interference in elections last year represented some kind of new norm, said Thomas Rid, a professor at Johns Hopkins University who is writing a book on Russian active measures. These types of operations, he said, are extremely difficult to pull off and, as the world has seen, can backfire. In many ways, he said, the Russians just got lucky.
“I think one of the risks of the 2016 operation is that we all overestimate how much you can achieve from it and how easy it is,” he said. “You just can’t replicate this in the country every time.”
Nevertheless, Germans prepared well in advance for any hint of Russian interference.
The Federal Office for Information Security ran penetration tests looking for vulnerabilities in computer systems and software of the federal election authority. The Bundestag and the individual campaigns consulted with experts about strengthening their computer security. And major news media outlets established teams of fact checkers to protect against fake news.
German officials are now looking beyond the elections at ways to bolster the country’s cyber defenses even further.
At the Federal Security Council meeting, which was held in March, officials hammered out what has become known as the “hack-back” strategy. The plan is to try to turn the tables on the hackers, launching offensive cyber attacks against them and destroying their online infrastructure before any real damage can be done.
While the German military can now legally launch a cyber offensive following hacker attacks on military resources, there is no provision in German law allowing for the country’s cyber forces to respond to attacks on civilian infrastructure like the power grid, hospitals or servers that process election results.
“Our cyber defenses are Swiss cheese,” said Jacob Schrot, a Bundestag staffer responsible for intelligence oversight and cyber security matters.
Russia is not the only threat on this front. Germans are still angry about revelations made by Edward Snowden that the National Security Agency under President Barack Obama had hacked into Ms. Merkel’s cellphone.
Though a precise plan of action has yet to be implemented, that federal authorities would even consider taking offensive action against an enemy is a measure of how seriously the country has come to view the cyber threat.
Enduring trauma of the Nazi era has made Germans squeamish about flexing their country’s military muscles. But Russia’s recent history of revanchism under President Vladimir V. Putin — not just interfering in elections but supporting hard-right nationalist parties in Europe and dabbling in military adventures, like the annexation of Crimea and instigation of war in eastern Ukraine — has forced Germans to confront a new reality.
Marian Wendt, a member of Parliament from Ms. Merkel’s party, the Christian Democratic Union, who oversees cyber security issues, said in an interview that Germany would prefer cooperation with Mr. Putin and Russia. But he said Germany also had a responsibility to protect itself.
“At some point you have to attack your attackers,” he said.
The hack-back strategy has stirred controversy here, with some charging that it comes close to violating Germany’s constitutional prohibition of offensive warfare adopted after the country’s defeat in World War II. Cyber experts also question whether Germany possesses the technical expertise to pull off such a tactic, particularly against Russia’s own highly advanced teams of cyber warriors.
“Our main challenge right now is a shortage of skilled IT security workers,” said Sven Herpig, a cyber security expert with a German think tank, Stiftung Neue Verantwortung. “Why do we waste the few talents that we have on the offensive side when we could actually use them on the defensive side.”
Germany’s talk of offensive cyber actions could also escalate tensions with the Kremlin, said Mr. Rid, from Johns Hopkins University. And with Russia quiet at the moment, many question the wisdom of provoking it.
“Loose German talk of hack-back,” Mr. Rid said, “could translate into Russian as ‘bring it on.’”
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