The Trump family’s personal bankers, faced with a choice between alienating a client who holds the world’s most powerful office or snubbing lawmakers armed with subpoenas, caught a last-minute break from the unlikeliest of places: a federal lawsuit by the president himself.
The claim, filed by President Trump, three of his children, and his companies in federal court in New York City on April 29, effectively shifts responsibility to the judiciary for deciding whether the legislative branch’s constitutional duty of overseeing the chief executive includes the right to see his financial records.
That’s good news for Deutsche Bank and Capital One, the lenders named in the suit, according to Ira Matetsky, a partner at Ganfer, Shore, Leeds, and Zauderer with decades of experience in corporate law. The banks can now say, “We will abide by whatever the court instructs us to do,” he told the Washington Examiner. “That makes it a lot easier.”
The House Intelligence and Financial Services committees have sought the banks’ records amid inquiries into whether Trump’s business dealings as a real estate developer and entertainer pose conflicts of interest in his current position.
[Related: Trump sues Deutsche Bank, Capital One to counter House subpoenas]
The president, who has promised to fight all subpoenas from the Democrat-controlled House, says their only goal is to undo an election that he won.
“We just went through the Mueller witch hunt,” Trump told reporters in late April. “I thought after two years we’d be finished with it. No. Now the House goes and starts subpoenas. They want to do every deal I’ve ever done.”
In the lawsuit against Deutsche, whose U.S. operations are based in New York, and Capital One, headquartered in McLean, Va., Trump argues that the subpoenas are unenforceable because Congress overstepped its authority by starting an investigation unrelated to potential legislation.
Further, he and his children — Ivanka Trump, now a White House adviser, and Eric and Donald Trump Jr., who run the Trump Organization in their father’s absence — claim the subpoenas violate the federal Right to Financial Privacy Act, which would require that they be given copies of the subpoenas and offered 10 days to object to them.
[Also read: No one testifies: Trump says the White House is fighting ‘all the subpoenas’]
That law, however, cites judicial and administrative subpoenas, not those issued by Congress, which the Supreme Court held in 1975 are constitutionally protected from interference by other branches of government when they involve legislative duties.
In Eastland v. U.S. Servicemen’s Fund, the court noted that a subpoena from the Senate Subcommittee on Internal Security for the fund’s bank account records couldn’t be challenged on the basis of an improper motive since the Constitution doesn’t allow outside agencies to make such a determination.
The matter nonetheless took five years to move through the federal court system. If Trump’s lawsuit were to stretch out over the same period, the House wouldn’t be able to evaluate his finances before the 2020 election, which critics say is the president’s goal.
“This lawsuit is not designed to succeed; it is only designed to put off meaningful accountability as long as possible,” U.S. Reps. Maxine Waters, D-Calif., and Adam Schiff, D-Calif., chairmen of the House Financial Services and Intelligence committees respectively, said in a joint statement afterward.
“As a private businessman, Trump routinely used his well-known litigiousness and the threat of lawsuits to intimidate others, but he will find that Congress will not be deterred from carrying out its constitutional responsibilities,” they added.
Capital One didn’t return a message seeking comment on the subpoenas. Deutsche is committed to “providing appropriate information to all authorized investigations and will abide by a court order regarding such investigations,” said spokeswoman Kerrie McHugh.
Financial disclosure forms Trump filed in 2017 showed at least $130 million in outstanding loans from Deutsche Bank, which the New York Times says has lent him well over $2 billion.
One of the only large Wall Street firms willing to do business with the president, whose companies have a history of bankruptcies, Deutsche was fined $425 million by New York’s banking regulator in January 2017, the same month Trump took office.
The state Department of Financial Services said a “mirror trading” scheme between offices in Moscow, London, and New York had laundered $10 billion from Russia, which the bank missed numerous opportunities to halt.
Four months later, Waters, the highest-ranking Democrat on the Financial Services Committee, which was then controlled by Republicans, asked then-Deutsche CEO John Cryan for details on the bank’s internal review of the scheme as well as whether any loans made to Trump or his family had been guaranteed by the Russian government.
Since regaining power in the House, Democrats, including Waters, have been motivated by a desire to “drown Trump with investigation” and “make Trump’s life a living hell,” the president argued in his lawsuit, citing news reports.
The subpoenas to Deutsche and Capital One, which together hold numerous Trump family and business accounts, were designed to harass Trump, “rummage through every aspect of his personal finances, his businesses, and the private information of the president and his family,” the Trumps claimed. Democrats, the president said, wanted “to ferret about for any material that might be used to cause him political damage.”
The notices were sent shortly after the party took over from Republicans, and Deutsche told the Trumps it planned to begin surrendering documents on May 6, unless ordered by a court not to do so. Capital One indicated similar plans.
While the banks have the luxury of deferring to the courts, the dispute between Congress and the White House is quickly escalating into a constitutional crisis, said Jaret Seiberg, an analyst with Cowen Washington Research Group, which has tracked federal policy for the past four decades.
“The president’s strategy is to drag these fights out through the election, and then he will refuse to comply if he wins by saying that voters made the choice,” Seiberg said. “That is the same strategy he used on his taxes,” and it undermines confidence in the federal government, he added.
Trump’s approach is a departure from those of predecessors including Richard Nixon and Ronald Reagan, said Victoria Nourse, a Georgetown University law professor who specializes in the constitutional separation of powers. She previously served as chief counsel to Vice President Joe Biden, a Justice Department appellate lawyer, and special counsel to the Senate Judiciary Committee.
For example, she said, then-White House counsel John Dean and chief of staff H.R. Haldeman testified before Congress when lawmakers investigated the Nixon administration’s role in a break-in at Democratic Party headquarters in the Watergate complex before the 1972 election.
In the Reagan era, Oliver North, John Poindexter, and Fawn Hall testified to Congress about the sale of arms to Iran, which was under an embargo, to finance a rebellion against the socialist Nicaraguan government.
“In the past, it has been the conventional wisdom inside the Beltway that presidents incur more political damage by stonewalling than allowing Congress to do its job,” Nourse wrote in a blog post for the American Constitution Society.
While those rules appear to have changed, Congress is unlikely to lose a court fight, she said, given Supreme Court decisions in cases such as Watkins v. U.S. In that ruling, handed down in 1957, justices said the power to conduct investigations is inherent in Congress’ legislative role, covering not only matters that might be the subject of new laws but possible corruption or inefficiency within the federal government.
While Congress’ oversight duties can generally be interpreted broadly enough to include a wide-ranging inquiry, Trump’s lawsuit may “test the limits,” Robert Mintz, a former federal prosecutor now in private practice, told the Washington Examiner.
“In the end, this is a battle between Congress’ claim to assert legitimate oversight over a co-equal branch of government and the Trump family’s claim that Congress should not be permitted to issue subpoenas to engage in a purely political fishing expedition,” he added. “The legal fight will almost certainly slow down the ability of Congress to proceed with their investigation, which is in and of itself a victory of sorts for the president.”
