2019-08-25 16:54:56 UTC
President Donald Trump wont stop haranguing Federal Reserve Chairman Jerome
Powell to cut the Fed interest rate again now by as much as a full
percentage point. One entity that would save millions annually from such a move
would be Trumps own company along with its various businesses.
The Washington Post reports that before he became president, Trump borrowed more
than $360 million in four loans from Deutsche Bank for his hotels in Chicago and
Washington, D.C. and his Doral golf resort in Florida.
All of the loans have variable interest rates, according to Trumps financial
disclosure statements. That means the more he can convince Powell to lower the
Fed rate, the more money hell save.
Lower interest rates would also help Americans paying mortgages. But it would
hurt people on fixed incomes with little or no debt who count on interest from
savings accounts or savings vehicles such as Certificates of Deposit, which
would pay less interest.
Trump already benefited when the Fed cut short-term rates in July for the first
time in more than a decade by a quarter of a percentage point.
Bloomberg found that for every quarter-point reduction in rates, Trump could
save $850,000 in annual interest rate payments on his loans. That would mean
Trump could reap more than $3 million in annual savings if the Fed dropped rates
a full percentage point as Trump is demanding. Bloomberg estimates that Trump
now owes about $16.3 million a year on his loans.
A full-point rate percentage cut is typically done during an economic emergency
and Trump claims the American economy is booming. Critics say such a cut would
leave the Fed with little extra stimulus space in the event the economy craters.
Trump, unlike other presidents, has retained his businesses despite accusations
of conflict of interest as he weighs whats best for him against whats best
for the American economy.
Powell said Friday at a Federal Reserve symposium in Jackson Hole, Wyoming, that
lowering rates further might not be enough to protect the American economy from
Trumps trade policy. He said the presidents trade war with China has created a
complex, turbulent situation that was threatening the economy.
Trade policy uncertainty seems to be playing a role in the global slowdown and
in weak manufacturing and capital spending in the United States, Powell warned.
After the remarks, Trump again slammed Powell, indicating he was a bigger enemy
of the U.S. than China.
Before he was president, Trump often called for lower interest rates, which
benefited his real estate business, the Post noted.
Trump has grabbed every dollar he can in business. He has been sued dozens of
times for nonpayment of bills in his businesses. He used money from his charity
organization to pay off legal settlements for his for-profit businesses, and was
forced to shut down the foundation. He once sued Deutsche Bank to duck out of a
hefty mortgage, according to the Post. He has also dodged debts by declaring
bankruptcy six times.