Michael Kruse is a senior staff writer for Politico.

In September of 2008, as markets tanked on Wall Street, the American financial crisis intensified and global economic panic spread, Donald Trump took to television with a message for the American people, and the message was: I told you so.

“If you remember two years ago when I was on your show,” Trump said to Larry King on CNN, “I predicted near depression.”


“On your show two years ago,” he told Neil Cavuto on Fox News, “I really—I mentioned the word depression then.”

It wasn’t true. In fact, in the years preceding the Great Recession, in interviews with journalists, in promotional materials for his own businesses, and in his customary slew of TV appearances, Trump had said precisely the opposite—telling King, Cavuto and others that “the economy continues to be fairly robust,” “real estate is good all over,” “the real estate market is going to be very strong for a long time to come,” “I’ve been hearing about this bubble for so many years … but I haven’t seen it,” and “this boom is going to continue.”

Trump has premised his run for president on his self-proclaimed business genius, his negotiating skill and his ability to succeed where others fail; along the way he has bragged about how well he performs in down markets. In last month’s first debate, Hillary Clinton tried to tar him with his own boasts, charging that Trump “rooted for the housing crisis” so he could buy low and profit from what was a desperate and frightening time for so many people. Trump proudly owned up to the charge: “That’s called business,” he shot back.

Clinton’s debate dig, though, gave Trump credit he didn’t deserve. A review of his behavior around the worst financial crisis of this generation shows that Trump didn’t “call it,” didn’t see the recession coming—or at least didn’t say so in public—and he didn’t really benefit from it, either. He wasn’t a seer. Like a lot of Americans, he got hit by the downturn and was just looking to survive. Trump weathered the crisis, and was able to do that because of what he and his businesses had become—and he did it using tactics he had perfected over decades to rescue himself from precarious financial situations. He bragged, he exaggerated, and—when backed into a corner—he sued, using brash and antagonistic legal strategies to buy himself time on the obligations he couldn’t meet.

By the onset of the Great Recession, Trump didn’t have skin in the game the way he once had: He’d become a brand-builder more than a building-builder, a risk-shifter more than a risk-taker. He got through the recession largely because rather than skin in the game his name was the game. His business model had morphed from pricey assets and showy, debt-saddled purchases to TV (The Apprentice), Trump-tagged services (Trump Mortgage, the travel website GoTrump.com) and hawked expertise (Trump University, self-help books like Trump: Think Big and Kick Ass), beauty pageants, golf courses and low-to-no-investment licensing deals—putting the Trump name on suits, steaks and the fronts of condominium projects financed mostly or exclusively with other people’s money.

In Atlanta, Florida and Mexico, Trump-licensed condos failed, as did GoTrump and Trump Mortgage, with buyers and builders losing money on what turned out to be terribly timed investments. In Atlantic City, the recession was one of the final nails in the coffin of Trump’s perpetually shaky casino operation. The publicly traded Trump Entertainment Resorts lurched toward a sixth Chapter 11 bankruptcy filing. Trump himself escaped from these disasters comparatively unscathed. His shareholders took the hit on the casinos. He even made some money from the condo deals thanks to his licensing set-ups.

Trump and architect Adrian Smith unveil an artists rendition of Trump Tower Chicago at a news conference September 23, 2003 Chicago, Illinois. | Getty

There was one major exception: Trump Tower Chicago. It is the project that could have hurt him during the recession more than any other. It was his most ambitious endeavor at the time, and the most leveraged—made possible principally by a $640 million construction loan from Deutsche Bank. It was squarely up to Trump to make the sleek skyscraper succeed, and it was one of his most demanding and complicated efforts since the original Trump Tower on Fifth Avenue in Manhattan. The 92-story river-front Windy City luxury high-rise opened in early 2009, perhaps the most challenging moment in modern real estate history, when millions of people—homeowners, real estate speculators and developers alike—suddenly found themselves drowning in debt.

“He was on the hook,” said Cyndy Salgado, a vice president of development for the firm that handled the first push of sales and marketing for the building’s nearly 500 residences.

“This wasn’t a licensing deal,” said Gail Lissner, a vice president at the city’s Appraisal Research Counselors, who is familiar with the details of the project. “There was a lot more at risk here.”

So Trump fought. In spite of his stated assurances that he was cash-flush—“I was in a very strong financial position,” he told POLITICO this week, declining to elaborate—he sued Deutsche Bank to try to get out of a $40-million portion of the construction loan that he had personally guaranteed, invoking a force majeure clause in the contract. It’s a phrase that literally means a “superior force” and refers to a natural disaster or an occurrence so extraordinary and unpreventable that it can absolve parties of liabilities. One of the attorneys for Deutsche Bank, Steven Molo of New York, marveled at Trump’s audacity.



Six weeks after Trump had gone on TV and said he had predicted the recession, he filed a lawsuit clamoring for relief — arguing, essentially, that the American real estate bust was an unforeseeable act of God.

“He was saying that he had all this money, and everybody else was going to hell in a hand basket, and he’s doing great—and then he filed that lawsuit,” Molo said in an interview with POLITICO this week. He called it “kind of telling” and “kind of crazy.”

In other words, some six weeks after Trump had gone on TV and said he had predicted the recession, he filed a lawsuit clamoring for relief—arguing, essentially, that the American real estate bust was an unforeseeable act of God.

***

In the long arc of the life of Trump, the Great Recession stands as one of the lesser-explored windows of time, a kind of in-between phase. It was several years after the launch of The Apprentice, the reality show on NBC that changed his image from a dated symbol of gauche 1980s excess to a pop culture role as America’s most iconic boardroom boss. And it was several years before he’d become a polarizing political figure by embracing “birtherism,” the bogus conspiracy theory that Barack Obama was not born in this country. As the recession loomed, Trump was mostly just a constant presence on the nation’s TV screens.

“He had become an entertainer,” Trump biographer Michael D’Antonio said in an interview.

He was an eager, recognizable guest, making appearance after appearance on network morning programs and nighttime cable staples—to promote his books and shows and his products and pageants, while also being asked to comment on matters of utter unimportance (celebrity ephemera) alongside those of absolute consequence (the economy, presidential politics), the hosts often transitioning from one to the other without so much as a commercial break, blurring whatever remained of any line that used to exist between news and entertainment.

From 2006 to 2008, on NBC, ABC and CBS, on Fox News, CNN and CNBC, Trump opined on everything from nepotism (“I like nepotism”) to prenuptial agreements (“You have to have a prenuptial agreement”) to Vladimir Putin (“He’s doing a great job”) to Paris Hilton (“I happen to think she’s very beautiful”) to Hillary Clinton (“Hillary is terrific”) to Angelina Jolie (“not a great beauty”) to Rosie O’Donnell (“a bully” and “a loser” who “said terrible things about Kelly Ripa, about Danny Devito …”) to his hair (“everyone is saying it’s real”) to his genes (“you know, the racehorse theory, there is something to the genes—and I mean, when I say something, I mean a lot”) to the possibility of a female president (“Look, it’s time, it’s time”).

He often was asked, too, to give viewers financial advice as well as his general assessment of the state of the economy.

In a 2006 audiobook to promote thousand-dollar packages for Trump University tutorials, he granted the possibility of a real estate downturn. “If there is a bubble burst, as they call it, you know you can make a lot of money,” he said, attempting to shift the focus of the Trump University endeavor from teaching customers how to take advantage of an up market to how to take advantage of a down market (or at least pay Trump to try to learn). “I sort of hope that happens,” Trump added, speaking about a potential market crash, “because then people like me would go in and buy.” In a 2007 article in the Globe and Mail of Toronto, he said something similar: “People have been talking about the end of the cycle for 12 years, and I’m excited if it is. I’ve always made more money in bad markets than in good markets.” These are the sources for what Clinton said during last month’s debate.

Both those comments, though, came with caveats—and the opposite of any evidence of Trump’s clairvoyance. “I’m not a believer that … the real estate market is going to take a big hit,” Trump said in the audiobook. And if it did happen? “We’re talking very minor compared to the depression of the early 1990s,” he told the reporter from the Globe and Mail. (That downturn lasted two years as opposed to more than the four years of the Great Recession, Vox reminded readers this week, and led to an unemployment rate that spiked at a little less than 8 percent for a single month while the recession caused an unemployment rate that bad or worse for four straight years.)

As signs pointing to a financial crisis mounted, Trump generally remained resolutely bullish about the economy, slow to either see or acknowledge the gathering reality—even when pressed.

“I don’t think … the market has peaked,” he told Maria Bartiromo on CNBC in April of 2006. “I’ve been hearing about this bubble for so many years from you and everybody else in your world, but I haven’t seen it. I will let you know when I see it.”

Bartiromo sounded skeptical. And she wondered why Trump recently had gotten into the mortgage business with Trump Mortgage—given, she said, that this was a juncture at which basically the entire industry had begun to brace for a marked decline. “New home sales, for one, plunged more than 10 percent in the month of February,” she told Trump. “That’s got to be a statistic you’ve seen.”

“I think the market is very good,” Trump responded. “I think it’s a great time to start a mortgage company.” He doubled down: “The real estate market is going to be very strong for a long time to come.”

That October, past what proved to be the country’s overinflated, unsustainable home-price peak that summer, Trump went on Cavuto’s show on Fox News and touted “this incredible economy” that “just keeps going.”

He dismissed others’ increasingly dour talk about the economy as media make-believe. “The media loves to have a crash,” Trump said. “And then they love to have a comeback. And then they love to have a crash again—you know, because that is newsworthy, and people buy newspapers.”

Only in 2007 did he start to occasionally alter his tune. And it wasn’t until 2008 that he began to more consistently state the obvious.

“It’s a horrible market,” he confirmed on August 12, 2008, on ABC’s Good Morning America.

In the middle of that September, on CNN with Larry King, he went ahead and claimed he had predicted this recession. Asked to assign blame, he listed “the times,” “greed on Wall Street” and “everybody, even the regular consumer that went out and bought a house and got a mortgage that was ridiculous.”

A week later, he showed up in Chicago—for a “topping-off” ceremony for his towering new and primarily residential building, the tallest constructed in the United States since the Sears Tower in the same city in 1973. Trump Tower Chicago had been a long time coming. Plans began in 2001. And now Trump’s task was especially daunting. Fresh data painted a foreboding picture: Home sales in August in the metropolitan area had plunged a whopping 30 percent. Pre-sales during the climb to the top of the market had been brisk—yet roughly 25 percent of the 486 residences in the tower remained unsold, according to local reports at the time, and even Trump admitted they were becoming “a stubbornly slow sell.” Phil Skowron, one of the most active brokers—then and now—selling residences in Trump Tower Chicago, said it was more than that. “He was sitting on 200 units he needed to sell after the market crashed,” he told POLITICO this week.

Construction continues on the Trump International Hotel & Tower in Chicago on May 18, 2006. | Getty

Before the downturn, everything was “going tremendously,” Chicago broker Tere Proctor, who helped initiate the pre-sales in 2003, said in an interview.

“We couldn’t write the contracts fast enough,” she said.

Now sales were at a standstill. “The condos weren’t selling or moving like they were pre-recession,” Skowron said.

“It made selling all real estate harder at the time,” said Salgado, the vice president of development for the firm handling sales and marketing at that point. Trump Tower, she said, was nowhere near immune. “It was just as susceptible to market forces as any other building.”

The economy, Trump told the Associated Press the last week of September, was “truly ready to tank” and—dropping the D-word now, for real—“rushing into one big depression.” He said he supported the federal, taxpayer-funded, $700-billion economic bailout, proposed by Treasury Secretary Henry Paulson and signed into law in October by President George W. Bush. “I think it’s probably needed,” Trump said.

The good news, he explained to reporters in Chicago, was that at least his building was almost finished—unlike “the skeletons of the other ones,” he said, “strewn all over the place.”

But he still had to pay for it.

The AP reported in late October that buyers of units in his tower had closed on approximately $200 million in sales and had committed to another not quite $400 million, according to public records, but also that Trump and his business entities owed their lenders—Deutsche Bank plus other banks—as much as a billion dollars. And bills were about due. He had until the first week of November to try to negotiate an extension.

***

The night of November 4, 2008, just across the river from Trump Tower Chicago, Barack Obama in Grant Park in front of an estimated crowd of nearly a quarter-million people gave his first speech as the newly minted president-elect.

Trump was a fan.

Up until that point, Trump widely and loudly had made plain his unfettered disdain for President Bush. That October, in an interview with CNN’s Wolf Blitzer, he gave Bush “a F-minus” for how he had “stupidly managed” the country “for the last eight years”—with a focus on the conflicts in Afghanistan and Iraq. “He got us into the war with lies,” Trump told Blitzer. “And, I mean, look at the trouble Bill Clinton got into with something that was totally unimportant. And they tried to impeach him, which was nonsense. And yet Bush got us into this horrible war with lies, by lying, by saying they had weapons of mass destruction, by saying all sorts of things that turned out not to be true.” In the stretch run of that year’s presidential election, Trump also had endorsed John McCain, the man he later would ridicule as “not a war hero” because he was captured in Vietnam. “Sure,” Trump told King back then, “I’ll endorse him on your show—why not?”

The day after Obama’s historic election, though, Trump had nothing but nice things to say about America’s first black president.

“His speech was great last night,” Trump told Greta Van Susteren on Fox News. “I thought it was inspiring in every way.”

His praise for Obama continued throughout that year and into the next. “I think he’s doing great,” Trump told Blitzer on CNN in December. “I think Hillary is a great appointment.” In January to Fox News’ Van Susteren, Trump called Obama “a young, vibrant, smart president.” In February, he told her he was “strong and smart, and it looks like we have somebody that knows what he is doing finally in office, and he did inherit a tremendous problem. He really stepped into a mess, Greta.”

Trump knew firsthand how much of a mess. Between Obama’s election and his inaugural, Trump’s troubles with his tower in Chicago because of the cratering economy became clearer in court records in Queens County, New York.

November 4—Election Day—was the first time he let his lenders know he considered the economic crisis a force majeure that was making it impossible for him and his business entities to make a debt payment due on November 7 of $334,150,336.40. Trump was required to personally pay $40 million of that. On November 6, though, he filed his lawsuit against Deutsche Bank, arguing he shouldn’t have to pay any of the debt until the crisis ended “and for a reasonable time thereafter.” Only a couple months earlier, he had pinned the crisis partly on greedy, overextended homeowners—“the regular consumer” who “got a mortgage that was ridiculous”—but now he was seeking relief, and he was blaming his predicament not on himself but on his lenders and circumstances over which he claimed he had no control.

And Trump didn’t just want an extension. He wanted compensation. He said Deutsche Bank should pay him $3 billion on account of its “predatory lending practices” and the fact that this had the potential to harm his “first-class luxury” reputation. Deutsche Bank was unmoved. It demanded Trump pay up. On November 26, in a detailed response, Molo and two other attorneys for the bank used Trump’s own bragging—much the way Clinton would in their debate and in many ads nearly eight years later—as a weapon against him.

They noted that he pitched himself as “the archetypical businessman” and “a deal-maker without peer” in Trump University promotional pamphlets.

They noted that he told readers in his 2004 book called How to Get Rich to use the courts to “be strategically dramatic.”

They noted that he said in his 2007 book Think Big and Kick Ass that he “love[s] to crush the other side and take the benefits.” The attorneys pointed out that his recollections of his deep difficulties of the early ‘90s included the following takeaway: “I turned it back on the banks and let them accept some of the blame. I figured it was the bank’s problem, not mine. What the hell did I care? I actually told one bank, ‘I told you you shouldn’t have loaned me money. I told you that goddamn deal was no good.’” Banks, Trump told his readers, “are afraid of getting sued.”

Molo looked beyond the blunt-force gall and braggadocio and saw something more basic—something that made Trump no different from thousands of average homeowners with underwater mortgages. “He clearly,” the Deutsche Bank attorney said in an interview this week, “was in a ‘work-out situation’”—meaning he couldn’t pay what he owed when he owed it and needed to find a way to work it out. He needed to renegotiate. Or else.

The brokers and realtors in Chicago knew it as well.

“The best defense is a good offense,” Salgado said this week, “which is what he did with Deutsche Bank when he sued them when he was defaulting on the loan.”

“He was trying every single angle to get what he wanted, to make it a profitable or even a break-even scenario,” Skowron said.

“It was all about holding cards,” Lissner said. “Staying power. Time.”

And it worked.

Trump Mortgage failed in 2007. So did GoTrump. Trump Entertainment Resorts, his casino company, would miss debt payments and finally file for bankruptcy in February 2009—his sixth and last bankruptcy—a month in which Trump went on Fox News and cheered Obama’s $800-billion stimulus plan. “This is a strong guy (who) knows what he wants,” Trump said, “and this is what we need.” He added: “We had the Great Depression. We would have done it again. Because I saw panic like I have never seen a number of months ago, and at least they have funded the banks. The banks have made some horrible, horrendous deals.”

In the case, though, of Trump Tower Chicago—of Donald Trump, et al. v. Deutsche Bank Trust Company Americas, et al., in the Supreme Court of New York, County of Queens—Trump ultimately got a good deal, the kind he was looking for. The legal tussle was resolved in 2010, with Trump wrangling a five-year extension to pay his debt.

Today, the retail space in the lower floors remains almost entirely vacant—“poorly located,” said David Stone, a commercial real estate specialist in the area around Trump Tower Chicago, facing the river rather than the street—and sales of the hotel-condos, residences that can be rented out as hotel rooms when the owners aren’t using them, have had only spotty success, according to brokers, realtors and city real estate experts who spoke to POLITICO. But the main residences sold out in 2014—finally. That took longer than Trump or any of them would have expected pre-recession, and they sold in many cases for prices several hundred dollars per square foot lower than those originally sought. Units that had been going for $1,000 or $1,100 per square foot, Skowron said, fell to $800 to $850 per square foot, and those that were priced initially at more like $800 or $900 per square foot had to drop down to $500 or $600. Given the circumstances, though, and the uniquely awful timing of the opening, they said they can’t help but consider Trump Tower Chicago a success.

“It could have gone a lot worse,” Skowron said.

“I mean, he didn’t lose the project,” Lissner said of Trump. “There were a number of deals at that time where developers just handed their keys back to the bank. He managed to stay in control.”

“It was definitely a success,” Proctor said. “It remains one of the premier luxury condominiums in Chicago.”

“The Chicago building is one of the most spectacular anywhere in the country,” Trump said in his statement this week to POLITICO.

Now, with the Great Recession receding into history, the biggest problem with Trump Tower Chicago, say realtors who are involved in sales of its residences and others who are close observers of the city’s real estate scene, is actually … the name, and the current political campaign, of its owner. Last year, after a sustained period of steadily climbing sales, real estate agents began to notice things had stalled. The main obstacle for Trump’s trophy in Chicago since the crash of 2008, it turns out, is his presidential candidacy of 2016.

Potential buyers, Salgado said, “like the building, and they like the views. But they don’t like the person whose name is on the building.”

Trump perhaps didn’t help matters, either, when last spring he said “we’re sitting on an economic bubble” and predicted “a very massive recession”—puzzling many economists by preaching pessimism in a period of overall economic improvement, a stark inversion of the rosier projections he made 10 years ago in spite of the uniformly ominous signals.

“There’s no getting around the fact that people are just a little bit apprehensive about investing their money in the building,” Skowron said of Trump Tower Chicago. “Buyers don’t respond well to uncertainty. Real estate doesn’t respond well to uncertainty.”

The specifics of this uncertainty, however, are unprecedented. “I don’t think anyone’s ever seen anything like this,” he said. “What other president do you know, or candidate, that has ever been this involved in real estate around the world—and to be as controversial as Trump is?” So potential buyers are left wondering: “What is he going to say? Will he offend somebody? Will prices go up if he becomes president? Or will people be embarrassed to live here if he becomes president?” Or even if he doesn’t.

November 8, Skowron said, can’t get here soon enough.