You’ve probably heard all the screams from the TV talking heads about the favoritism being afforded to Trump. The latest is a huge reduction in his fine in the fraud case. The $464 million amount is now reduced to $175 million. So, people ask why. The Appellate Court has not as yet disclosed their thinking, But the 600 pound gorilla in the room is not fear of violence or retribution in our view. Think about it…Trump built his organization on inflated property values which were systematically used to borrow more from various lending institutions to buy more property. It’s like a house of cards (or a Ponzi scheme) built on loans. So Trump probably does not actually own more than 25% of any of his assets. What will happen if those assets go on the sale block on a “must be sold” or auction basis? Many of those assets will probably sell for less that their mortgaged amount–meaning most of the sales will be used to pay down–but not pay off—existing mortgages. In other words, a fire sale will do little to produce $464 million. But it will cost New York City banks and other lending institutions a bundle. They will lose big time and the CEO’s/Chief lending Officers of those lenders will probably lose their jobs due to extending loans that turned into large bad debts. The property value ripple affect may cause a temporary decline in other property market values. So this Appellate Court decision is a win for Trump because he’s–in a sense–too big (in debt) to fail. If he goes down, it’s a major hit to a lot of New York City’s banking world. You won’t hear that on TV because those shows originate in New York City and the relationships with their own executives and the banks is intertwined. This leaves the TV commentators with a void to try to explain the fine reduction and allows them to speculate in other directions. That’s the reason we write this blog…to give you another view.
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