Holding the G-7 Summit at a Trump Golf Course Is Blatant Corruption

In the competition to persuade wealthy customers to stay at high-end golf resorts, the Trump National Doral Miami is a so-so contender. When Golf magazine recently listed the top twenty-five golf resorts for luxury and the top twenty-five for general excellence, Doral didn’t make either list. It did get included in the top-hundred list, and it was also featured in the “Top 25 Resorts for Buddies,” a segment designed for hardcore golfers seeking “immersion therapy with multiple courses to play 18, 36, or until you just can’t see the ball anymore.” Doral has four courses, including the famous Blue Monster, which for many years was a regular stop on the P.G.A. Tour, and it’s certainly easy for your buddies to get to. Miami International Airport is just a few miles away.

Like many golf courses and golf resorts, Doral has faced serious challenges from rising competition and a decline in the number of people playing golf. In 2012, the Trump Organization purchased Doral out of bankruptcy court for a hundred and fifty million dollars—Deutsche Bank provided a mortgage—and added “Trump National” to its name. Once Trump bought the property, he started an extensive renovation, which was completed in 2016. The Trump Organization claimed that the renovation cost more than two hundred million dollars, although there is no way to verify that claim. But, in any case, Doral, which has almost six hundred and fifty guest rooms, represented a major investment for Trump, and it is by far the biggest of his golf resorts.

Despite the renovations, however, Doral’s struggles have continued. They may well have intensified. In 2016, Cadillac pulled out of sponsoring the venue’s annual P.G.A. Tour event, which created invaluable publicity, and the organizers moved the tournament to Mexico City. (“I hope they have kidnapping insurance,” a miffed Trump commented.) Earlier this year, the Washington Post’s David A. Fahrenthold and Jonathan O’Connell, two reporters who have done sterling work tracking Trump’s intermingling of his public duties with his private business interests, reported that Doral had seen a “steep decline” in its business since Trump decided to run for President. The resort’s “room rates, banquets, golf and overall revenue were all down since 2015,” the Post reported. “In two years, the resort’s net operating income—a key figure, representing the amount left over after expenses are paid—had fallen by 69 percent.”

In a statement provided to the Post, the Trump Organization claimed that the Zika virus and hurricanes had driven visitors away from South Florida. But the paper cited statistics showing that “competing resorts in the same region of Florida still outperformed the Trump resort in the key metrics of room occupancy and average room rate.” It also quoted experts who suggested that the Trump name might be hurting the Doral brand.

Whatever the cause of its troubles, Doral clearly needed a boost, and its proprietor has now provided it with a huge one: a federal contract to host next year’s G-7 meeting, which will bring the resort a substantial sum of taxpayers’ dollars and generate invaluable publicity for Doral all over the world. On Thursday, Mick Mulvaney, Trump’s chief of staff, announced that the summit will be held at Doral in June of 2020. Trump will attend the meeting, along with the leaders of Britain, Canada, France, Germany, Italy, and Japan, and sizable delegations from each member country.

Nobody should be surprised, of course. In making frequent visits to his commercial properties in Florida, New Jersey, and other locales, Trump has been funnelling federal dollars into his own coffers ever since he was elected. For example, Mar-a-Lago, Trump’s oceanfront resort in Palm Beach, charges its government visitors up to five hundred and fifty dollars a night for their roomsaccording to ProPublica. Trump started pitching Doral as the G-7 venue as early as June. By August, when he attended this year’s G-7 meeting, in the French coastal city of Biarritz, the fix was already in, although he tried to portray the choice of Doral as the outcome of a proper search process rather than that of a Presidential edict. “They went to places all over the country, and they came back and they said, ‘This is where we’d like to be,’ ” he said. “It’s not about me. It’s about getting the right location.”

Since resigning as the head of the U.S Office of Government Ethics, in 2017, Walter Shaub has taken on the invaluable role of pointing out Trump’s many transgressions and challenging them alongside his colleagues at the watchdog group Citizens for Responsibility and Ethics in Washington, or crew. But, as Shaub pointed out to me in a conversation on Friday, the selection of Doral represents a “new low” in the President’s behavior. “It’s just so obviously a right-and-wrong issue,” Shaub said. “It’s the kind of thing that we see happening in completely broken nations. There is no definition of corruption that anyone could think of that would lead them to say this isn’t corruption.”

The even greater scandal is that Trump continues to get away with this sort of thing. If an ordinary government official awarded a valuable federal contract to a company that he had an ownership stake in, he could well be arrested and sent to prison. As President, Trump is exempt from the federal conflict-of-interest statutes—a glaring omission that must have delighted him when he found out about it. That means there is virtually no chance of the Justice Department even looking into his involvement in the choice of Doral. Of course, other officials who were involved might not be so lucky. Shaub has raised the question of whether they may have violated criminal provisions of the Procurement Integrity Act, which lays down strict rules for the awards of government contracts. On Friday, Shaub and his colleagues at crew called on the State Department’s inspector general to look into the matter.

Since the delegations to the G-7 meetings routinely pay for their own hotel rooms and other facilities, choosing a resort that Trump owns to host the summit looks like a clear violation of Article I, Section 9 of the U.S. Constitution, which states that no federal officeholder can receive any “present, Emolument, Office, or Title, of any kind” from any foreign state unless he receives the consent of Congress. (An emolument is a payment in money or anything else of value.) But a number of legal challenges to Trump’s self-dealing based on the Emoluments Clause have already been bogged down in the courts.

In July, the Fourth Circuit Court of Appeals, which is based in Richmond, Virginia, threw out a lawsuit that claimed that the President’s ownership of the Trump International Hotel, in Washington, D.C., which representatives of many foreign governments now patronize, violated the Constitution. The three-judge panel said that the plaintiffs—the Attorney Generals of Maryland and Washington, D.C.—didn’t have legal standing to enforce the Emoluments Clause. Last month, a separate panel of judges, from the Second Circuit Court of Appeals, which is based in New York, issued a ruling that rejected the Fourth Circuit’s reasoning and reinstated another emoluments lawsuit, which crew had filed. But that case, and a third one in Washington, D.C., where the plaintiffs are a group of Democratic lawmakers, are proceeding at a very slow pace—too slow to stop Trump.

With the courts tied up and the Justice Department under the control of a Trump loyalist, responsibility for bringing Trump to book falls squarely on Congress, which already has a lot on its hands. The Democrats are busy pursuing “Ukrainegate.” Most Republicans on Capitol Hill are as cowed by Trump as they’ve ever been, and at least one of them has welcomed the decision to hold the G-7 meeting at Doral. “Selfishly as a Floridian, senator from Florida, I think it’s great any time our community gets that kind of attention,” Marco Rubio said.

That statement, along with the over-all lack of reaction from other G.O.P. officials, caused Shaub to despair. He said to me, “If the Republican senators shrug this off, then their message is that there is literally nothing they would say is corruption.” Judging by Trump’s recent actions, he has already received the message.

How U.S. Banks Took Over the World

A decade ago, they almost brought down the global financial system. Now they rule it.

When two of Europe’s corporate titans sat down to negotiate a merger this year, they called American banks.

Fiat Chrysler Automobiles hired Goldman Sachs Group Inc. as its lead adviser. France’s Renault SA hired a boutique bank stacked with Goldman alumni. In a deal that would reshape Europe’s auto industry, the continental banks that had sustained Fiat and Renault for more than a century were muscled aside by a pair of Wall Street deal makers.

A decade after fueling a crisis that nearly brought down the global financial system, America’s banks are ruling it. They earned 62% of global investment-banking fees last year, up from 53% in 2011, according to Coalition, an industry data provider. Last year, U.S. banks took home $7 of every $10 in merger fees, $6 of every $10 in stock commissions, and $6 of every $10 paid to hold and move corporate cash.

urope’s banks are smaller, less profitable and beating a hasty retreat from Wall Street.

From their central perch in London and with close ties to developing countries, Europe’s banks were primed to benefit as financial services went global. They charged onto Wall Street in the 1990s and pressed their advantage as U.S. banks limped out of the 2008 crisis.

Then, “they handed the whole system on a platter to the Americans,” said Colm Kelleher, the Irish-born former Morgan Stanley executive.

Coming out of the crisis, U.S. banks quickly raised capital and shed risk, unpleasant tasks that Europeans put off. American businesses recovered quickly, and its consumers are eager to borrow and spend. A tax cut in 2018 boosted profits. Interest rates have risen.

Meanwhile in Europe, regional economies are sputtering and borrowing has slowed.

Central bankers have cut interest rates below zero, which leaves banks struggling to eke out a profit on loans. Banking policy in Europe remains fractured, with national and continental regulators pursuing often conflicting agendas.

“It is not our remit to promote national, or even European, champions,” said Andrea Enria, the European Central Bank’s top banking regulator.

Twenty-five years ago, European banks charged into the U.S. They bought storied firms like Donaldson, Lufkin & Jenrette and Wasserstein Perella and dangled big paydays for rainmakers. When Deutsche Bank announced a $10 billion takeover of Bankers Trust in 1998, it promised at least $400 million in bonuses to retain top bankers.

The challenges of merging a conservative European commercial lender and a U.S. derivatives shop gave competitors pause. Goldman’s CEO, Hank Paulson, shared his doubts with a hotel ballroom of his bankers: Deutsche Bank “just signed up for 10 years of pain,” attendees remember him saying.

Henry Paulson is sworn in as Treasury secretary by Supreme Court Chief Justice John Roberts in 2006. Before he headed the Treasury, he ran Goldman Sachs. PHOTO: JIM YOUNG/REUTERS

But in an era of cheap debt and light regulation, the land grab seemed to pay off. Deutsche Bank had a $3 trillion balance sheet in 2007 and that year earned twice as much as Bank of America Corp. in securities-trading. Royal Bank of Scotland was briefly the largest bank in the world, wielding a balance sheet bigger than Britain’s entire economy.

Even the financial crisis looked at first like an opportunity. When Barclays PLC bought Lehman Brothers in a fire sale, it got 10,000 of the firm’s U.S. bankers and few of its bad debts. On Lehman’s Times Square trading floor, the loudspeakers played “God Save The Queen.” Deutsche Bank pounced on Wall Street’s clients.

The high-water mark was in 2011, when global investment-banking fees were roughly split between European and U.S. firms.

The good times didn’t last. A 2012 sovereign-debt crisis across the continent put new pressure on the region’s biggest banks. Economic growth slowed across the continent. Central bankers turned interest rates negative in 2014. German media calls them “Strafzinsen,” translating roughly to “penalty rates.”

UBS slashed 10,000 jobs and cut big parts of its trading operation. Royal Bank of Scotland fired thousands of investment bankers and sold its U.S. retail arm to focus on the U.K. Three-quarters of the Lehman bankers Barclays picked up in 2008 were gone within five years, according to Financial Industry Regulatory Authority records.

Meanwhile, U.S. banks were quietly encroaching on European rivals’ territory. In 2009, JPMorgan completed an acquisition of Cazenove, the U.K. investment bank. Every year since 2014, JPMorgan has generated more investment-banking revenue across Europe than anyone else, according to Dealogic. (The London-listed owner of Peppa Pig, a British cartoon character, hired JPMorgan Cazenove to advise on its sale in August to U.S. toy giant Hasbro Inc. )

As U.S. banks got stronger and their European rivals weakened, client loyalties began to change.

Today’s companies are increasingly global. They make more of their money in the U.S. and have swapped a shareholder register stacked with old-line European families and trusts for the likes of BlackRock Inc. and other U.S. investment giants, where Wall Street banks are better connected. The percentage of U.K. companies’ stock owned by foreigners rose from 16% in 1994 to 53% in 2016, according to government statistics.

Fiat, the Italian car maker that pursued a tie-up with France’s Renault this year, makes two-thirds of its money in the U.S.,  where it owns Chrysler. Its shots are called by John Elkann, the New York-born scion of the family that founded Fiat in 1899.

One of Mr. Elkann’s closest advisers is a Goldman Sachs banker who for the past 15 years has organized a yearly gathering of European billionaire business owners, according to people who have attended. They swap stories, share advice and, more often than not, hire Goldman for deals.

Globalization has cost the Europeans not just on headline-grabbing mergers, but in the everyday business of managing money for clients. Deliveroo, a food-delivery startup based in the U.K., sought to ramp up in Europe and the Middle East. Instead of hiring local banks in each market, it consolidated its money flows with Citigroup , which has local licenses in 98 countries and a global digital platform.

JPMorgan has made a big push to expand transaction banking for European clients. In 2010 it established a new unit of global bankers to pitch day-to-day transaction services to big companies, and later took over dozens of European transaction relationships from RBS.

UBS’s Stamford, Conn., trading floor in 2005. It was able to accommodate 1,400 traders and staff. PHOTO: RICK FRIEDMAN/CORBIS/GETTY IMAGES

Most recently JPMorgan said it is extending its commercial banking business globally, targeting hundreds of midsize businesses across Europe. It has sought to take on a more local flavoring, doing things like sponsoring math-and-science programs for students in France, Germany and Italy.

Last year, Citigroup and JPMorgan were two of the three biggest providers of day-to-day transaction banking globally, along with Britain’s HSBC Holdings PLC, according to Coalition. U.S. banks accounted for 57% of the global transaction-banking revenue pool among the biggest banks in that business, versus 22% for Europeans, Coalition said.