The banks were afraid he would go bankrupt, and then they'd lose all the money they'd lent him. But despite being deeply in debt, he was practically a synonym for wealth and prestige. When a rich, famous guy was needed in a film (Zoolander, Home Alone, etc) he'd be invited to cameo. Perhaps most rich people would turn that down, but he didn't. His brand and name were valuable, to him and to the banks..
In order to prevent him from declaring bankruptcy, the banks lent him even more money, but with some strict conditions - one being that he would limit his personal spending to $450,000 per month. This was more more than the salary of the bank's CEO who made the loan, but it was less than this man usually spent each month. Obviously, this would have been a fortune for ordinary people, but for this man it meant a serious tightening of the belt.
The banks reasoned that by keeping this man's empire afloat, he could trade on his "good" name, and they'd end up making more money than if they simply allowed him to go bankrupt and seized his assets.
To sum up, the banks made a series of bad bets on this man. Rather than take the loss, they doubled down. Even though his empire was failing, if they kept up the pretense that he was rich and successful they could squeeze more dollars out of him.
To sum up, the banks made a series of bad bets on this man. Rather than take the loss, they doubled down. Even though his empire was failing, if they kept up the pretense that he was rich and successful they could squeeze more dollars out of him.
When someone owes you money and can't pay you back, you have what is known as a "toxic asset" on your hands. That phrase came into its own after these banks started issuing subprime mortgages to anyone with a pulse, regardless of their ability to pay back the loan. Again, rather than take the loss on loans in default, banks doubled down and resold them as AAA rated securities. With a little gold paint, a toxic asset can look very shiny.
The subprime mortgage-backed security Ponzi scheme imploded the day buyers stopped buying the toxic assets, and the pretense of AAA ratings quickly flaked off like so much gold paint. But the toxic asset currently in the White House is still riding high. Sixty three million people just bought his stock. But I have to wonder, when did the arrangement between the banks and this man stop? Is he still trading on his name to pay back his creditors? Is that why he uses the office of the presidency to promote his daughter's clothing line? Is that why he is sitting in that chair in the first place?
This is why we need to see his tax returns. We need to know who his creditors are, because he is their asset, not ours.
(shout out to my lovely wife Rachael for her research that contributed to this post)
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