Op-Ed: Trump can’t raise bond – Why, and this isn’t entirely about him

Donald Trump and his company were found to have unlawfully inflated his wealth and manipulated the value of properties to obtain favorable bank loans – Copyright AFP Luis ROBAYO

Donald Trump is not one of my favorite topics. This new situation, however, and the inability to raise bond, is more interesting than it looks. It calls into question his actual level of support from donors. The question is why they’ve decided to pull the plug on this otherwise straightforward scenario.

Trump needed a $454 million bail bond to appeal the civil fraud verdict in New York. That amount of hard cash is now an “insurmountable difficulty” according to Trump’s lawyers.

The background here is a sort of choir of different information and different takes on Trump’s financial position. Any amount of information is available regarding Trump’s expenses, debts, unpaid debts, allegedly unpaid debts, and whatever. It’s now got to the point of being an almost NASA database of information, correct or otherwise.

There is absolutely no point in getting into a black-or-white scenario about these expenses. Legally, either something’s payable or it isn’t. Innuendo doesn’t pay bills, and it doesn’t do much for information quality, which is consistently lousy, selective, and scattergun.

…So, let’s ignore that. This time, we have a hard number to work with. To try and clarify:

The verdict was a massive hit to Trump. The loss of the New York businesses, let alone their assets, would be a nuke to revenue and overall net asset values. The appeal is understandable.

The amount to be raised for the appeal doesn’t make it any easier. The bond is effectively to cover the value of the verdict.

Trump has been trying without success to raise that money through corporate sources including Berkshire Hathaway and Chubb. Both of these companies could not accept properties for collateral. That’s significant.

The trouble with any appeal is that it may not succeed. Putting up money becomes that much more difficult on that basis alone. Even if the properties are not subject to seizure and outside New York, Trump’s other hideous legal issues are apparently no incentive.

In the past, Trump has been able to raise any amount of money on the basis of the property portfolio. Take New York out of the portfolio mix, and it’s nothing like the same ball game anymore.

The rest of the issues aren’t about money or rhetoric. They’re about a level of situational awareness on the part of Trump’s “allies” and advisors.

This appeal is very much an each-way bet at best.

The financial difficulties of an appeal should have been obvious. It’s a bit like Wile E Coyote going over a cliff twice to see if it works.  

The “can’t raise bond” scenario does nothing good for Trump’s image. He’s now visibly fallible. The tide has come in, and the footings of the edifice are in the water.

If top-tier companies like Berkshire Hathaway and Chubb won’t help, who will? According to The New York Times, 30 corporations said no.

He doesn’t seem to be getting much help from the family, either, but that sort of information isn’t likely to be made public.

This looks very much like a plug-pulling exercise at very high levels. These corporations are a higher dimension of credit, and they won’t do it. That might define Trump’s current credit rating, doing it the hard way.  

Where has the other support gone? Trump has had a lot of support from high-end donors. It’s unclear who’s doing what if anything. Some new donors appear to be in play, but is that enough?

As well as a plug-pulling exercise, this could be a few bullets as well. The presidential campaign is in disarray and generally said to be financially messy both for the GOP and Trump. Trump’s campaign finances have been a steady drip of negatives in the news for quite a while.

Trump is now in an extremely difficult position. That $454 million may not be the end of the ever-rising expenses. Much more disruptive is the fact that the real big boys don’t want to play.

Politically, this could well be a write-off exercise. As pure business, it looks like one. In finance, you can be a good risk or a bad risk, but you can’t be both.

I may be wrong. Maybe this is a simple “Yes” or “No” scenario. Not even political. It’s just that it’s so hard to believe that.

_________________________________________________________

Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.