Newsweek Reports Donald Trump Was “Self-Made Disaster,” Needed Millions In Bailouts From Dad

Newsweek Reports Donald Trump Was “Self-Made Disaster,” Needed Millions In Bailouts From Dad

Since launching his presidential campaign in June 2015, New York businessman Donald Trump has strongly emphasized his business acumen when describing his overall abilities. His status as a billionaire real estate developer would appear to serve as a strong endorsement of those talents.

However, in the wake of Trump’s 1995 tax returns showing that he lost $916 million in a single year, that notion is being challenged. To further bolster the argument that he’s not as good a businessman as he claims, a look at some of his tax returns from the 1970’s also challenged that idea. Those returns show that he also endured a number of business setbacks during that period.

While Trump has refused to release any of his previous tax returns, those from four decades ago were available because of his application for an Atlantic City casino license in 1980 and 1981. This effort came almost simultaneously with the opening of the Grand Hyatt in New York City, one of his first major projects.

To refurbish the former Commodore Hotel, Trump needed bank loans from Chase Manhattan bank to do the job. Those loans were guaranteed by his father, who was already a wealthy real estate developer. In addition, a $35 million line of credit was provided to the younger Trump without him even having to sign a contract.

Using some of that money to invest in other projects, Trump soon became inundated with debt. The property that he was supposed to be deriving money from to pay for his loans didn’t have enough renters to simply break even. That revenue gap resulted in Trump paying out of his own pocket simply to keep the properties operating, which resulted in a personal loss of over $400,000 in 1978.

The negative numbers continued the following year, jumping to $3.4 million in losses, while his personal savings amounted to slightly above $400,000. Despite all of these issues, Chase Manhattan had increased his credit line to $38 million, though he was unable to borrow money from any other banks.

That changed in September 1980, when his father personally loaned him $7.5 million and another family business contributed close to $1 million to the younger Trump. Both loans had no deadline for final repayment and were interest-free, accommodations that other less well-connected developers wouldn’t have available.

The aforementioned $916 million loss by Trump was the result of losses on what by that time were multiple casinos. He had first opened Trump Plaza Hotel and Casino in 1984 before following up with Trump’s Castle the next year. A few years later, he purchased the Taj Mahal casino.

However, to finance the latter purchase, Trump was forced to issue junk bonds because banks continued to be wary of lending him money. While some of those institutions did end up providing him the necessary funding, they attached high interest rates.

When the economy entered a recession and real estate prices took a major hit, Trump quickly found himself $4 billion in debt. After borrowing from 72 different banks, Trump was personally responsible for $1 billion, 25 percent of that debt.

Those bank creditors chose not to force Trump into personal bankruptcy in order to salvage their investment. They assumed that his natural ability as a salesman would allow him to recover from this severe financial setback and repay them. That eventually proved to be the right strategy.

Trump has previously dismissed having filed for Chapter 11 bankruptcy four times by simply saying that he was using the available laws to restructure his business dealings and save his company.