Today, top Democrats on the House Financial Services Committee sent a letter to Inspectors General at federal financial services agencies, the Department of Housing and Urban Development, and the Department of Justice, calling on them to root out any potential conflicts of interests in President-elect Donald Trump’s administration.
Led by Ranking Member Maxine Waters (D-CA), the letter was also signed by Ranking Members Carolyn Maloney (D-NY), Subcommittee on Capital Markets and Government Sponsored Enterprises; Wm. Lacy Clay (D-MO), Subcommittee on Financial Institutions and Consumer Credit; Emanuel Cleaver (D-MO), Subcommittee on Housing and Insurance; Gwen Moore (D-WI), Subcommittee on Monetary Policy and Trade; and Al Green (D-TX), Subcommittee on Oversight and Investigations.
“President-elect Donald Trump will begin his term with more potential conflicts of interest and less transparency about his personal finances than any president in recent history,” the Members wrote, adding that as President, “Trump will have ample opportunity to make and influence policy decisions that benefit his personal business and financial interests.”
The letter highlighted Trump’s ties to Deutsche Bank and the influence he will have as President in appointing an Attorney General that will oversee ongoing settlements with the bank. It also expressed concerns with Trump’s unwillingness to mitigate potential conflicts of interest.
“President-elect Trump’s questionable ethical principles may influence who he appoints to lead our federal agencies and, ultimately, influence the culture within these federal agencies. As a result, the work that you perform will become especially integral to upholding the ethical standards of the Executive branch.”
The Members asked the Inspectors General to take immediate and proactive steps to ensure political appointees at the agencies they oversee are held to the highest ethical standards “and mitigate conflicts of interest when they inevitably arise.”
The full text of the letter can be found below:
The Honorable David A. Montoya The Honorable Michael E. Horowitz
Inspector General Inspector General
Department of Housing and Urban Development Department of Justice
451 7th St SW 950 Pennsylvania Avenue NW, Suite 4760
Washington, D.C. 20410 Washington, D.C. 20530
The Honorable Eric M. Thorson Fred W. Gibson
Inspector General Acting Inspector General
Department of the Treasury Federal Deposit Insurance Corporation
1500 Pennsylvania Avenue NW 3501 Fairfax Drive
Washington, D.C. 20220 Arlington, VA 22226
The Honorable Laura S. Wertheimer James Hagen
Inspector General Inspector General
Federal Housing Finance Agency National Credit Union Administration
400 7th Street SW, Suite 3.201 1775 Duke Street
Washington, D.C. 20024 Alexandria, VA 22314
Carl Hoecker Mark Bialek
Inspector General Inspector General
Securities and Exchange Commission Board of Governors of the Federal Reserve System
100 F Street NE 20th and Constitution Avenue NW
Washington, D.C. 20549 Washington, D.C. 20551
Dear Inspectors General:
President-elect Donald Trump will begin his term with more potential conflicts of interest and less transparency about his personal finances than any president in recent history. The American people have been given little assurance about how he will manage his extensive network of businesses and financial holdings.
Once Donald Trump takes office, he will have incredible influence over a wide range of policies. While federal ethics rules require nearly all government employees to recuse themselves from matters that affect their outside financial interests, these rules do not apply to the President or Vice-President. Accordingly, Trump will have ample opportunity to make and influence policy decisions that benefit his personal business and financial interests.
One area of particular concern stems from Donald Trump’s deep, ongoing relationship with Deutsche Bank. Trump has turned to Deutsche repeatedly to finance his real estate investments. Deutsche has been the only major Wall Street bank to continue to lend to Donald Trump and his entities in the wake of six Trump-business bankruptcies. Over the past two decades, Deutsche has been a lender or co-lender in at least $2.5 billion in loans to Donald Trump or his companies. The businesses within Trump’s network currently owe Deutsche Bank nearly $360 million in outstanding principal, including $125 million for his Florida golf course, Trump National Doral; up to $69 million for his Chicago high-rise, Trump International Hotel and Tower; and a $170 million line of credit used to fund the development of his new hotel in Washington, DC, the Trump International Hotel in Washington.
Deutsche Bank has been the subject of multiple federal agency investigations in recent years, including one that resulted in a $1.925 billion settlement with the Federal Housing Finance Agency over claims that the bank defrauded two U.S. government-controlled companies in the sale of mortgage-backed securities and another that concluded with a $1.575 billion settlement with the Department of Justice and the Commodities Futures Trading Commission for the bank’s alleged manipulation of benchmark interest rates. Currently, Deutsche Bank is engaged in settlement discussions with the U.S. Department of Justice, which is seeking $14 billion dollars in fines from the bank for its role in the toxic mortgage crisis. This settlement could endanger Deutsche Bank’s financial health, which could strain the bank’s ability to lend future capital to Trump’s real estate projects and, thus, threaten his business interests. As President, Donald Trump will be granted influence over the outcome of Deutsche Bank’s settlement negotiations with the Justice Department through his ability to appoint and direct the Attorney General, which will give him the opportunity to advance his business interests at the expense of the best outcome for the American people.
Another major concern is Present-elect Trump’s unwillingness to take the traditional measures to mitigate potential conflicts of interest. Most recent presidents, including Presidents Ronald Reagan, George H. W. Bush, Bill Clinton, and George W. Bush, put their assets into a blind trust during their terms in office. Thus far, Trump has failed to take any action to address his financial conflicts of interest. While he has stated that he intends to use a “blind trust” to sequester himself from his business concerns, he has also stated that he will place his children in charge of managing this trust. This arrangement fails to meet the standard of a conventional blind trust, which is typically managed by an independent third party, rather than by immediate family members over whom Trump has ready access and influence. Donald Trump’s blind trust would be neither blind nor trustworthy. Further, Donald Trump has destroyed any notion that his children would be able to effectively segregate the Trump business interests from his political interests when he announced that his children would also serve on the executive committee of his presidential transition team.
President-elect Trump’s questionable ethical principles may influence who he appoints to lead our federal agencies and, ultimately, influence the culture within these federal agencies. As a result, the work that you perform will become especially integral to upholding the ethical standards of the Executive branch. In light of these unprecedented circumstances, we ask that you take immediate and proactive steps to ensure that any new political appointees at your respective agencies are held to the highest possible ethical standards and that you commit to diligently and constantly monitoring the actions of such appointees and mitigating conflicts of interest when they inevitably arise. We further ask that you continue to be vigilant in holding your agencies accountable to the American public and ensuring that waste, fraud and abuse is eradicated. Thank you for the excellent work you do, especially in this time of unprecedented change and challenge.
Sincerely,
Rep. Maxine Waters
Rep. Carolyn Maloney
Rep. Wm. Lacy Clay
Rep. Emanuel Cleaver
Rep. Gwen Moore
Rep. Al Green
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