The thinly sourced theories about Trump's loans and Justice Kennedy's son

"Just to state this: Justice Kennedy's son gave a billion dollar loan to Trump when no one would give him a dime, and Justice Kennedy has been ruling in favor of the Trump Administration position for 2 years as the Court decides 5-4 case after 5-4 case."

- Neera Tanden, president of the Center for American Progress, in a tweet, June 29, 2018

"The circumstances of Justice Kennedy's resignation must be investigated by the Senate Judiciary Committee before any replacement is considered. The Constitution does not give Trump the power to use underhanded means to induce Supreme Court resignations."

- Richard Painter, Democratic primary candidate for U.S. Senate from Minnesota, in a tweet, June 30, 2018

"Mr. Trump was apparently referring to Justice Kennedy's son, Justin. The younger Mr. Kennedy spent more than a decade at Deutsche Bank, eventually rising to become the bank's global head of real estate capital markets, and he worked closely with Mr. Trump when he was a real estate developer, according to two people with knowledge of his role.

"During Mr. Kennedy's tenure, Deutsche Bank became Mr. Trump's most important lender, dispensing well over $1 billion in loans to him for the renovation and construction of skyscrapers in New York and Chicago at a time other mainstream banks were wary of doing business with him because of his troubled business history."

- The New York Times, June 28, 2018

Justice Anthony Kennedy's decision to retire from the Supreme Court set off a wave of speculation, much of it focused on a past business relationship between Donald Trump and one of Kennedy's sons.

Tanden's tweet implies that Kennedy's independence was compromised because his son Justin had business with Trump while he worked at Deutsche Bank from 1998 to 2009.

Painter's tweet, which links to a brief article in the New Republic discussing the same Trump connection with Justin Kennedy, implies the president may have used "underhanded means" to get the justice to retire.

Trump's relationship with Deutsche Bank and Justin Kennedy has been documented over the years in the Wall Street Journal, Financial Times and other media. After the justice on June 27 announced his decision to retire, The New York Times renewed that focus.

"During Mr. Kennedy's tenure, Deutsche Bank became Mr. Trump's most important lender, dispensing well over $1 billion in loans to him for the renovation and construction of skyscrapers in New York and Chicago at a time other mainstream banks were wary of doing business with him because of his troubled business history," the Times reported June 28, adding that the justice's son "worked closely with Trump."

This reporting informed the New Republic article that Painter linked to and seems to have inspired Tanden's tweet, although she layered on grave inferences that don't appear in the Times article.

But there are several reasons why this supposed fishiness doesn't make sense.

Justice Kennedy will be 82 later this month, well past retirement age. He's a Republican appointee creating a vacancy for a Republican president. He could have been voting in favor of Trump's positions because he agreed with them. Although he voted with the liberal justices on numerous cases, and ruled to legalize same-sex marriage in 2015, Kennedy has a rightward bent. He wrote the Supreme Court's 2010 decision in Citizens United v. FEC and voted to strike down the entire Affordable Care Act in 2012. Considering his age, party affiliation and conservative views on many issues, it's not clear why Kennedy would have needed some secret inducement to create a vacancy for Trump.

Moreover, from 1998 to 2009, it would have been impossible for Justin Kennedy - then at Deutsche Bank - to know that Trump would be the president appointing a replacement for his father on the Court in 2018.

Is there any meat on the bone to justify the innuendo that Painter and Tanden seemed to be aiming at Kennedy and his son?

The facts Frankfurt-based Deutsche Bank is "the financial institution with probably the strongest ties" to Trump, the Wall Street Journal reported in 2016.

"Other Wall Street banks, after doing extensive business with Mr. Trump in the 1980s and 1990s, pulled back in part due to frustration with his business practices but also because he moved away from real estate projects that required financing, according to bank officials," the Journal reported.

For Deutsche Bank, this was an opportunity. "When Mr Trump was looking for capital in the mid-1990s, he found a good match in Deutsche," the Financial Times reported in 2017. "The German bank, dominant in its domestic market, was desperate to grow in the US. In particular, the bank saw a niche in serving rich developers who had hit a few bumps along the way . . ."

The relationship with Trump kicked off with a $125 million loan in 1998 to renovate an office building at 40 Wall Street in New York. Mike Offit, the Deutsche Bank executive who brought in Trump's business, said this loan predated Justin Kennedy's hiring in 1998. Offit had worked with Kennedy at Goldman Sachs and later recruited him to Deutsche Bank, he said.

"We were building a commercial mortgage business at Deutsche Bank, and we succeeded very quickly in becoming a major player," Offit said. "One of our main lines of business became large loans, specifically focused on New York, that we would securitize; some of them we kept on our balance sheet.

"I was doing a lot of these big loans to a variety of real estate developers in New York and real estate companies. One of the brokers I dealt with, Rob Horowitz, called me and asked if I would consider making a loan to Trump."

Months after the first loan, Trump took out another one for $300 million to build a condominium, Trump World Tower, facing the United Nations. Kennedy most probably had joined Deutsche Bank by that time, Offit said. But Kennedy did not work on that loan, he added. "Justin had nothing to do with either of those loans," he said. "Zero."

After Offit left Deutsche Bank in 1999, another banker, Eric Schwartz, became Trump's main point of contact, Offit said.

In 2005, Deutsche Bank and others loaned the future president $640 million to build the Trump International Hotel and Tower, which is now the second-tallest building in Chicago. This appears to be the only Deutsche Bank loan to Trump that involved the younger Kennedy.

Justin Kennedy through a spokesman declined to comment. Two people familiar with his thinking, speaking on the condition of anonymity, said this was the only Trump loan he worked on during his time at Deutsche Bank. Justin Kennedy does know Trump and knows the president's children socially, the two people said.

From his perch on the trading desk, Kennedy had an important role in the loan-approval process. "What the trading desk does is they price the loan . . . and then once the loan is originated, they figure out what to do with it: sell, syndicate, securitize in a trust," Offit said. In other words, Kennedy's job was to figure out how to manage Deutsche Bank's risk in loaning Trump the money to build his Chicago tower, and to securitize or sell off parts of the loan as needed.

The extent to which Kennedy worked with Trump on this loan, or possibly on other Deutsche Bank matters, is unclear. "In that role, as the trader, he would have no contact with Trump . . . unless Eric [Schwartz] was trying to get Justin in front of Trump for schmoozing reasons," Offit said, adding that he had recently spoken with former colleagues at the bank about Kennedy's work.

The Financial Times reported that, as Deutsche Bank was building its commercial real estate team in the late 1990s, "some of the appointments gave Deutsche more clout in boardrooms and on the party circuit." The newspaper mentioned Tobin "Toby" Cobb, a banker who was the son of two U.S. ambassadors. "Justin Kennedy, a trader who arrived from Goldman to become one of Mr Trump's most trusted associates over a 12-year spell at Deutsche, is the son of a Supreme Court justice," the Financial Times reported.

The Chicago deal ended up somewhat acrimoniously for Deutsche Bank and Trump. The Wall Street Journal reported that Deutsche Bank syndicated the loan, eventually reducing its exposure to less than $50 million.

In 2008, Trump failed to pay $334 million on the Chicago loan and sued Deutsche Bank, arguing that the global financial crisis was an unforeseeable event akin to a natural disaster. He also sought $3 billion, reasoning that Deutsche Bank's practices helped trigger the financial crisis. Trump's lawsuit alleged that Deutsche Bank compromised the Chicago loan by selling off pieces to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," the Wall Street Journal reported.

That last part is interesting, since the people we spoke to familiar with Justin Kennedy's thinking said it was his handiwork to syndicate the Chicago loan. Deutsche Bank and Trump settled out of court in 2009, and the commercial mortgage unit hasn't done business with Trump again.

The relationship between Trump and Deutsche Bank continues, but it's the private banking arm that handles his business now. Rosemary Vrablic, Trump's long-time wealth manager, is the main point of contact at Deutsche Bank.

The private banking unit loaned Trump $170 million in connection with the redevelopment of the Old Post Office building in Washington (now the Trump International Hotel), according to the Financial Times. Vrablic's unit also loaned Trump $125 million "to finance the purchase of Miami's Doral Golf Resort and Spa in 2011, which he re-christened Trump National Doral," according to the Wall Street Journal.

These two loans were made after Justin Kennedy had left Deutsche Bank, by a division of the company where he didn't work.

Stephanie Ruhle, an MSNBC anchor who overlapped with Justin Kennedy at Deutsche Bank, said during a broadcast that it was "shortsighted" to say Kennedy "was the point guy who lent all of this money to Donald Trump."

Tanden declined to comment. But she also wrote on Twitter, "I think there is an appearance of impropriety that Justice Kennedy never himself disclosed that his son had a large scale profitable relationship with Trump and Kennedy never even discussed recusal in cases where Trump was a party." And, "I think any judge would recuse in those circumstances because of an appearance of bias."

The Wall Street Journal reported that Deutsche Bank, despite the legal wrangling, did not lose money on the Chicago deal. But there are no ethics rules that say Kennedy should have disclosed his son's "profitable relationship" with Trump more than a decade prior, or recused himself from hearing cases in which Trump was a party because of his son's work. Kennedy did not report receiving income from his son on his financial disclosure forms from 2004 to 2016; these forms don't require him to list his adult children's income sources.

The justices of the Supreme Court are not bound by the Code of Conduct for United States Judges, but in any event, those rules don't say the income sources of a judge's independent adult children should prevent the judge from hearing certain cases. They do say, "A judge should not allow family, social, political, financial, or other relationships to influence judicial conduct or judgment." But it's a stretch to imagine this broad admonition should have led Kennedy to recuse himself from hearing Trump cases, even if the code of conduct applied to the Supreme Court. By Tanden's logic, the appearance of bias could paralyze the government, since officials would have to keep tabs on the finances of their grown children and recuse themselves from matters that could be associated with their children's sources of income.

Painter said he was voicing concern that Trump and his administration may have acted inappropriately, not Justice Kennedy or his son.

The New York Times, in the same article from June 28, reported that "there were no direct efforts to pressure or lobby Justice Kennedy to announce his resignation."

"But in subtle and not so subtle ways, the White House waged a quiet campaign to ensure that Mr. Trump had a second opportunity in his administration's first 18 months to fulfill one of his most important campaign promises to his conservative followers - that he would change the complexion and direction of the Supreme Court," the Times added.

Painter, who served as President George W. Bush's ethics lawyer, said that "given the report in The New York Times, I think the Senate Judiciary Committee needs to find out to what length the Trump administration was going to try to get Justice Kennedy off the court."

"I'm not saying Justice Kennedy did anything wrong," he said. "We don't know the facts. But if the White House tried to intimidate him, or if anyone tried to offer anything of value to try to get him to retire . . . that person who offered something of value to try to get him to retire committed what is probably an illegal act."

Painter added, "I don't see a conflict for Justice Kennedy arising from his son working at Deutsche Bank."

The Pinocchio Test

Justice Kennedy is an octogenarian who said he was retiring from the Supreme Court to spend more time with his family. He's a Republican appointee leaving a vacancy for a Republican president to fill. He's a conservative jurist with liberal tendencies, not the other way around, so it's not inherently suspicious that he would rule for Trump or want to see a conservative judge fill his seat.

It would be explosive if Kennedy's decision to vote a certain way or to retire was based on Deutsche Bank's dealings with Trump more than a decade ago. Scratching below the surface, there's no evidence to justify these theories. The New York Times article doesn't supply it. It says Deutsche Bank loaned Trump more than $1 billion "during" Justin Kennedy's tenure, not that he was signing the checks or that any rules were broken. What we could piece together about Justin Kennedy's history doesn't support these theories, either.

Standing alone, the tweets from Painter and Tanden are incendiary and worthy of Four Pinocchios. Painter says he wasn't questioning the Kennedys' actions. Uncorrected, his tweet leaves a different impression, since it relies on a New Republic article raising questions about the justice, his son and Trump.

Four Pinocchios.

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An award-winning journalism career spanning nearly three decades, Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street. He was The Washington Post's chief State Department reporter for nine years, traveling around the world with three different Secretaries of State. Before that, he covered tax and budget policy for The Washington Post and also served as the newspaper's national business editor. Kessler has long specialized in digging beyond the conventional wisdom, such as when he earned a "laurel" from the Columbia Journalism Review