Trump Loses Appeal Over Lawmakers’ Deutsche Bank Subpoenas

(Bloomberg) -- President Donald Trump, under escalating pressure from Democrats weighing his impeachment, suffered a stinging legal blow as a federal appeals court ordered two banks to provide Congress with his financial records.

The 2-1 ruling by a panel of the U.S. appeals court in New York means Trump will lose control of his long-secret business and personal records at Deutsche Bank AG and Capital One Financial Corp. unless the congressional subpoenas are blocked by the full appellate court or the U.S. Supreme Court.

The appellate panel, which ordered a one-week stay on its ruling to give Trump time to seek a further delay from the Supreme Court, rejected arguments by Trump and the Justice Department that the House Financial Services and Intelligence Committees had no legitimate reason to seek the information. It’s the latest court loss for an administration claiming broad executive power to ignore lawmaker demands.

“The committees’ interests in pursuing their constitutional legislative function is a far more significant public interest than whatever public interest inheres in avoiding the risk of a chief executive’s distraction arising from disclosure of documents reflecting his private financial transactions,” Circuit Judge Jonathan Newman wrote in the majority opinion.

Judge Debra Ann Livingston dissented from parts of the majority opinion, writing that the case should be sent back for the lower court to more closely examine the legal issues raised by Trump and to “afford the parties an opportunity to negotiate.”

Trump, the Trump Organization and the president’s oldest children have steadfastly refused to surrender their records to Congress. Armed with the documents, Democratic lawmakers will be able to more fully explore any conflicts of interest in the executive branch and whether the president has violated the Constitution’s emoluments clauses against accepting foreign gifts.

“We believe the subpoena is invalid as issued,” White House Counsel Jay Sekulow said in a statement. “In light of the Second Circuit decision, we are evaluating our next options including seeking review at the Supreme Court of the United States.”

The ruling is the latest in a series of federal appeals court decisions in New York and Washington that have gone against Trump and his legal arguments in support of secrecy and executive privilege.

Last month, the Manhattan-based appeals court said Trump had no right to block a subpoena for his tax filings from the New York district attorney, who is investigating whether the Trump Organization falsified business records to hide hush money payments to two women who claimed to have had affairs with him.

In another case, a federal appeals court in Washington upheld the validity of congressional subpoenas for Trump’s financial records. And a district judge in Washington ordered former White House Counsel Donald McGahn to comply with a congressional subpoena for his testimony, despite Trump’s claim that the subpoena was precluded by presidential immunity.

Breaking with four decades of presidential tradition, Trump has declined to make his detailed financial records public. Acting in his personal capacity rather than as president, he sued in April to stop Deutsche Bank and Capital One from handing over his records after they had been subpoenaed by the House committees. He lost in federal district court in May and appealed.

Possible Russian Ties

Democrats told the appellate panel on Aug. 23 that they had subpoenaed the records as they investigate potential money laundering by Russian oligarchs, along with Trump’s possible ties to Russia and whether the Kremlin has leverage over him. Trump argued that Congress’s request had no legitimate legislative purpose and should be rejected. The banks took no position.

Two subpoenas to Deutsche Bank demanded account information for Trump, his children and their immediate families and seven Trump businesses, requiring documents dating to 2010 and in some cases with no time limit. Capital One, where Trump has has held checking and savings accounts since at least 2015, was ordered to supply records for 15 Trump businesses, according to court papers filed by Trump’s legal team.

The bank case is one of several testing Congress’s power to obtain a sitting president’s financial records in the name of oversight, with significant implications for the relationship between the executive and legislative branches.

The case is Trump v. Deutsche Bank AG, 19-1540, U.S. Court of Appeals for the Second Circuit (Manhattan).

©2019 Bloomberg L.P.

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