Trump's billionaire friends are having no trouble raising debt under Dodd-Frank.

By Stephen Gandel
February 3, 2017

Carl Icahn, an advisor, and long-time friend to Donald Trump, doesn’t seem to have any trouble getting a loan these days. He might want to tell President Donald Trump that.

On Friday, Trump started his promised roll back of Dodd-Frank, the banking reform that was passed in the wake of the financial crisis. Trump called the law a “disaster” and vowed to do “a big number” on financial regulations earlier this week. Trump also said Friday that he had first-hand evidence that Dodd-Frank was not working: His friends can’t get loans.

“We expect to be cutting a lot out of Dodd-Frank, because frankly I have so many people, friends of mine, that have nice businesses and they can’t borrow money,” Trump said in announcing the review of Dodd-Frank on Friday. “They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”

However, plenty of Trump’s friends and advisors seem to be doing just fine when it comes to borrowing. Icahn’s company had its debt rating cut to junk in early 2016, but that hasn’t seemed to impede its ability to get a loan. In the first nine months of last year, Icahn Enterprises took out nearly $400 million in additional debt. In all, Icahn Enterprises borrowing has risen to nearly $13 billion, up nearly 50% from where it was before the passage of Dodd-Frank, the financial reform bill that Trump says is killing the ability of banks to lend, as Trump noted on Friday, to his friends.

Also having no problem borrowing, it seems, is Stephen Schwarzman, the private equity executive who chairs Trump’s Strategic and Advisory Forum and met Trump on Friday along with other business leaders. In September, Blackstone, Schwarzman’s firm, secured $100 million in debt for a single building at 44 Wall Street, located just steps from Trump’s own downtown office tower at 40 Wall Street. Schwarzman may have got the idea to take out the loan against the building from Trump. A year earlier, a Trump entity borrowed $160 million against Trump’s Wall Street building.

In all, Blackstone’s loans payable rose by $1.1 billion in the first nine months 2016. The company now has just over $12 billion in debt. In mid-2015, Seaworld, which was bought out by Blackstone in 2009, and is still the aquatic amusement park operator’s biggest owner, took out a new $280 million term loan. The company’s penguins have visited Blackstone’s offices to say thanks.

U.S. commercial and industrial loans took a hit after the financial crisis, but have since climbed substantially. Among the businesses obtaining loans without apparent distress: Mary Barra, the CEO of General Motors, who was sitting next to Trump when he made the comment about his friends borrowing woes on Friday. Last year, General Motors borrowed $2 billion to in order to shore up one of its pension funds. A spokesperson at GM at the time of the transaction called borrowing conditions favorable.

Then there’s ABC Supply Co., co-founded by Trump economic advisor Diane Hendricks, which was able to borrow just over $1 billion in 2013, nearly three years after Dodd-Frank was passed. The company has continued to be able to finance a string of deals including a $670 million purchase in November of dry wall and ceiling tile maker L&W Supply.

Last year, Fortune found that Trump and his businesses have taken on more than $1 billion in debt. That amount includes a $170 million line of credit on Trump’s recently opened Washington Hotel.

In the past, Trump has said that Dodd-Frank is killing small business lending. But there isn’t much evidence of that either. Commercial and industrial loans have been one of the fastest growing segments of lending in the past few years. At the end of Sept. 2016, the last the figure is available, the volume of C&I loans outstanding from U.S. banks had risen to $1.7 trillion, up $250 billion from two years before.

Trump may indeed have some friends who are having trouble getting loans right now. But that may say more about the company Trump keeps, and less about Dodd-Frank.

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