Trump’s company could save millions if interest rates fall as he demandsAugust 25, 2019
President Trump stands to save millions of dollars annually in interest on outstanding loans on his hotels and resorts if the Federal Reserve lowers rates as he has been demanding, according to public filings and financial experts.
In the five years before he became president, Trump borrowed more than $360 million via four loans from Deutsche Bank for his hotels in Washington, D.C., and Chicago, as well his 643-room Doral golf resort in South Florida.
The payments on all four properties vary with interest rate changes, according to Trump’s official financial disclosures. That means he has already benefited from falling interest rates that were spurred in part by a cut the Federal Reserve announced in July, the first in more than a decade — and his payments could drop by millions of dollars more annually if the central bank grants Trump’s wish and further lowers short-term rates, experts said.
“It will reduce his borrowing costs quite a bit if he gets what he wants,” said Phillip Braun, a finance professor at Northwestern University’s Kellogg School of Management. Braun said Trump’s savings could be even greater if Deutsche Bank permits his company to pay down the loans more quickly without a penalty, which banks sometimes allow.
The White House and the Trump Organization did not respond to requests for comment.
While Trump’s adult sons, Donald Trump Jr. and Eric Trump, are managing the family business, the president insisted on retaining ownership of his company after his election, bucking the practice of past presidents. That decision, ethics experts warned, would lead to potential conflicts of interest between his personal interests and public policy goals.
The Trump administration has argued that lower interest rates would spur more consumers to buy homes and cars and businesses to invest in new factories. Cutting rates also typically lowers the value of the dollar, making U.S. products cheaper to overseas buyers, a goal of the president.
But most economists and business leaders say Trump’s trade war is the biggest threat to the economy, not interest rates, which are already at historically low levels.
Since taking office, Trump has aggressively sought to lower interest rates and rejected the mostly hands-off approach other presidents have taken to the Fed, repeatedly blasting Chair Jerome H. Powell — whom Trump appointed to the post last year — for not falling in line.
On Friday, after Powell made no announcement of a rate cut and instead voiced concerns about Trump’s trade war with China, the president immediately attacked him on Twitter, writing that “As usual the Fed did NOTHING!”…