Floyd Norris has some good clean fun with Donald Trump and Deutsche Bank, whom Trump is suing in a brazen bid to get out of a $40 million payment. In the process, the column illustrates a lot of what was wrong in real estate and in banking in general in the bubble.

For this big project, built on the site of the old Chicago Sun-Times building, it appears from the court papers that Mr. Trump put in little of his own money. He got a construction loan for up to $640 million from a syndicate headed by Deutsche Bank and a $130 million junior loan from another syndicate headed by Fortress Investments, a hedge fund operator that has troubles stemming in part from bad loans made for other real estate projects.


The people who negotiated the construction loan did not think real estate prices could tumble.

Trump is saying he doesn’t have to pay because the banks created the financial crisis that has caused his condo sales to dry up. He wants $3 billion for damage to his reputation.

But the best parts of the piece (and the real point) are Norris’s masterly takedowns of the parties’ hypocrisies (and I love the picture the Times used of Trump blowing hard):

Deutsche Bank thinks the idea that an economic downturn should free people from the obligation to pay their debts is laughable.


Mr. Trump, it may be noted, does not think remorseful condominium buyers are in a similar position. When I asked him if he would let them walk away from contracts to buy apartments at predepression prices, he said he would not. “They don’t have a force majeure clause,” he said.

Here Norris takes Deutsche Bank’s (justified) needling of Trump and hoists the bank on its own petard.

The bank seized on the opportunity to discuss Mr. Trump’s reputation. “Trump is no stranger to overdue debt,” it said in asking that his suit be thrown out of court. It noted that Mr. Trump’s casino operations have filed for bankruptcy twice, adding, “This suit is classic Trump.”


The bank did not discuss why that history did not dissuade it from making the loan. One explanation might be that the fees it got for arranging the loan more than offset the risk from the small part of the loan it kept on its own books.

Right on. And good for Norris for including this:

Mr. Trump is vigilant in protecting his reputation. After I interviewed him and two associates, his general counsel sent me a note saying “it was a pleasure” talking to me, and adding: “Please be assured that if your article is not factually correct, we will have no choice but to sue you and The New York Times.”

And another example:

The Friday after Thanksgiving was not a really good one for Mr. Trump. Trump Entertainment Resorts, the casino company, announced it would miss an interest payment on its bonds, raising the likelihood of a third bankruptcy. Most of the shares are publicly owned, having been distributed to creditors in the last bankruptcy. They have fallen from a peak of $23.80 two years ago to 24 cents on Thursday.

Mr. Trump is doing his best to sound like that is not important to him. The casino company’s announcement emphasized that Mr. Trump was the “nonexecutive chairman” who was “not involved in the daily operations” of the company. He told me that “less than 1 percent of my net worth” is in the casino company.

At the current price, no shareholder could have a large net worth in that stock.

That is beautiful, my friends.

If you'd like to get email from CJR writers and editors, add your email address to our newsletter roll and we'll be in touch.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.