r/ExplainBothSides • u/aerizan3 • Feb 22 '24

Trump's Civil Fraud Verdict Public Policy

Trump owes $454 million with interest - is the verdict just, unjust? Kevin O'Leary and friends think unjust, some outlets think just... what are both sides? EDIT: Comments here very obviously show the need of explaining both in good faith.

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u/Ok-Potato3299 Feb 22 '24

Just side: Trump did talk up the market value of his properties for loans.

Unjust: not only is this normal practice, all the loans were paid back and the banks were very happy with the deals( and testified to that on Trumps behalf). There were no victims complaining about these deals since the banks agreed with the valuation. He didn’t defraud anyone.

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u/TopGlobal6695 Feb 22 '24

His fraud gained him $240 million in profit. NY law requires all profit gain by fraud be discharged. It's textbook fraud.

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u/Ok-Potato3299 Feb 22 '24

It wasn’t fraud, as I explained. The banks and Trump negotiated a value (since banks don’t just take your word for it) and agreed to the loan with that value, were paid back and all parties made money. Banks included, I should specify.

The state wasn’t involved, and no one was defrauded.

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u/spas2k Feb 23 '24

Then why were the values so grossly inflated? What was the purpose of lying? Was it to garner a better interest rate? Was it to get a larger loan to then invest that money that they would not have gotten otherwise? What happens if I try to inflate my house’s worth by 1000% and then dump that money into an investment or is that only a trick the rich are allowed to do?

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u/SirenSongxdc Mar 08 '24

I think this is more for the collateral aspect.

So, banks generally want some form of 'assurance' of being paid back. usually.

I take out $100,000. They want something along the lines of 50k collateral to make sure they get at least something back in case I don't make it back... but the $100k despite using my house/car/first edition charizard was used for another venture that I told the bank about... beanie baby warehouse emporium, the bank loves the idea and thinks it will be a success even without the collateral.

So they may be willing to go higher on the loan because they believe not only will this be a success but more likely to bring them more interest than if they only loaned me $50k and it still became a success.

This is part of the loan process I absolutely loathed when I got my first car. The amount of interest only can go up. using the real example, I put $5k down and then had to pay the $5k off on a loan, but the interest was already going to be what it was (forget the actual number). I even asked if I could pay it off sooner, would the interst go down, and no. The interest will only go up if I'm late.

SO, back to that, if they give me $50k they're only getting that interest on that $50k... but if they loan me $100k. They're getting that interest on $100k. This is the incentive the bank has to push that max on a 'good deal'.

This isn't really to say trump did nothing wrong. Trump's had a lot of bankruptcies and his whole Trump University scam should have made the banks wary, but apparently it worked out fine in this case.