President Donald Trump painted a rosy picture of his financial condition during a televised town hall Thursday night, calling his hundreds of millions of dollars in debt coming due “a peanut” and saying he had borrowed it as a favor to lenders eager to take advantage of his financial strength.
In fact, the loans, and the unusual requirement he had to accept to receive them, illustrate the financial challenges he faces and the long-standing reluctance of banks to deal with him.
Trump had to personally guarantee $421 million in debt, a rare step that lenders only require of businesses that may not be able to repay. The commitment puts his assets on the line and could place his lenders, should he be reelected, in the position of deciding whether to foreclose on a sitting president.
The personal guarantee also speaks to why, despite Trump’s assertion that banks are eager to lend him money, nearly all the money he borrowed in the last decade came from only two institutions.
“When a bank asks for a personal guarantee, it is because the bank isn’t satisfied with the creditworthiness of the borrower,” said Richard Scott Carnell, who served as assistant secretary for financial institutions at the Treasury Department under President Bill Clinton and now teaches law at Fordham University. “If the captain gives a personal guarantee for the ship, he will be less likely to sink it.”
Trump was asked about the debt in response to an investigation by The New York Times published last month based on a review of more than two decades of his tax-return data. The investigation found that Trump had personally guaranteed $421 million of his companies’ debts, with more than $300 million coming due within four years.
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