Real Estate

Hankey's $175M Trump Loan Highlights Business Over Politics

Billionaire Don Hankey posts $175 million bond for Trump, blending high finance with high-profile legal proceedings.

By Tal Alexander

4/3, 18:03 EDT

Key Takeaway

  • Don Hankey's $175 million loan to Donald Trump for an appeals bond draws significant media attention, spotlighting Hankey's diverse financing ventures.
  • Despite political affiliations, Hankey emphasizes the business nature of the deal, requiring 100% cash collateral from Trump's legal team.
  • This transaction marks Hankey’s first appeal bond, offered at a "very small" margin due to perceived low risk and substantial collateral.

A Billionaire's Bet on Trump's Legal Battle

In a move that has stirred both the financial and political spheres, Don Hankey, a part-time real estate financier and full-time auto-loan billionaire, has placed a significant wager by posting a $175 million appeals bond for Donald Trump. This transaction, facilitated through Hankey's Knight Speciality Insurance Company, marks a notable intersection of high finance and high-profile legal proceedings. Despite Hankey's assertion that the decision was purely business-driven, the bond posting has catapulted him into the limelight, with coverage spanning from CBS News to Bloomberg and the Los Angeles Times. Hankey, whose fortune is pegged at $7.4 billion by Forbes, surpassing that of Trump, has ventured into a domain that intertwines his financial acumen with the unpredictable currents of political legal battles.

Strategic Financing Amidst Legal Entanglements

The details surrounding the bond posting reveal a meticulously calculated financial maneuver. Trump's legal team, initially proposing a mix of cash and investment-grade bonds, ultimately provided 100 percent cash collateral. This adjustment underscores the stringent collateral requirements that have come to define Trump's recent financial undertakings, as he disclosed to Bloomberg his challenges in securing financing against real estate assets. Hankey's engagement in this high-stakes transaction is consistent with his history of navigating complex financial landscapes, from subprime auto loans to development financing in distress situations, such as the Bel-Air megamansion debacle and the Beverly Grove multifamily development.

The Broader Financial Ecosystem's Response

The reaction from the broader financial community to Hankey's involvement with Trump offers a glimpse into the current state of Trump's financial dealings. With traditional financial institutions maintaining a cautious distance, figures like Hankey and entities like Axos Financial Inc. emerge as pivotal players. This dynamic is further illustrated by Axos's refinancing of Trump's loans amidst scrutiny over asset valuations. The willingness of these "lenders of last resort" to engage with Trump, despite his controversial standing and the inherent risks, speaks volumes about the evolving landscape of high-risk, high-reward financial transactions.

A Calculated Risk or a Political Statement?

While Hankey insists that the bond posting was a business decision devoid of political motivations, the transaction does not exist in a vacuum. It reflects a broader trend of financial magnates leveraging their wealth and resources in politically charged arenas. Hankey's assertion of a "very small" margin due to the large amount and perceived low risk of the deal hints at the complex calculus that underpins such decisions. This move, Hankey's first foray into appeal bonds, may signal a strategic diversification of his financial empire, which has expanded to $23.4 billion in assets, encompassing sectors from healthcare to AI.

Management Quotes

  • Don Hankey:

    "This is a business deal and this is what we do." "We had the collateral so we gave him a good rate."