Donald Trump’s Goldman Sachs Problem

President-elect Donald Trump’s business conflicts of interest have dominated much of the post-election media coverage of his transition to the Oval Office. But of all the many potential conflicts between his global business and political interests, there’s one that stands out as a signature problem: Goldman Sachs.

Connections with Goldman Sachs, a global investment bank and financial services firm, creates conflicts for how a president might deal with issues ranging from regulations to taxes. Hillary Clinton received critique during the campaign for receiving speaking fees from the company. And, of course, a Goldman connection was an issue for President Obama’s administration, too: for example, Rahm Emanuel, Obama’s first chief of staff, had been on the company’s payroll, and Gregory Craig, former White House counsel left the administration to work there.

But the conflict would be much more pronounced under Trump.

While Trump has said that he’s sold about $40 million in stocks that he owns—a small fraction of his net worth—he is likely to keep a stake in the business organization he’s built around his brand name and simply ride out the conflict-of-interest storms that will arrive after he assumes office, the New York Times reported Thursday. This is a profoundly bad idea, and his Goldman Sachs conflict of interest is perhaps the best example of why.

While it’s true that Congress has no oversight of a president’s conflicts of interest, every president in modern history has voluntarily placed his financial interests in a truly blind trust to avoid even the appearance of impropriety. Trump believes his case is unique. He’ll announce his plan to deal with his many business and political conflicts on Dec. 15.

If Trump doesn’t sell off his key business assets, this conflict-of-interest problem will arise almost immediately.

While Trump has never released his tax returns, serious investigative reporting by multiple news organizations have managed to identify both the largest single sources of Trump’s wealth and the manner in which those assets are financed.

Fortune, for instance, published an extensive story on Trump’s extraordinarily good luck in turning a bankrupt situation involving Manhattan riverfront property into a 30% stake in two of the most lucrative buildings anywhere in the world: 1290 Avenue of the Americas in New York and 555 California Street in San Francisco. These two properties alone may account for more than a third of Trump’s entire net worth.

The New York Times, meanwhile, was able to determine the manner in which several of Trump’s signature real estate properties are financed—including 1290 Avenue of the Americas, 555 California Street and three others that make up almost the entirety of his net worth—by assessing publicly available real estate and tax records.

While it’s nearly impossible to accurately assess Trump’s true net assets and financial obligations from the broad categories listed on the personal disclosure form that Trump has filed with the FEC, it appears that Trump’s largest debt obligation is tied up with his 30% stake in the building at 1290 Avenue of the Americas, which is near Rockefeller Center, the Times reported.

The financial obligation on that building is $950 million. Trump is responsible for 30% of that debt. It is, by far, the single biggest debt obligation among his signature properties. Were it to become a troubled asset for any reason, it would cause an immense and immediate problem for the bottom line of his business.

There are two big lenders involved with the complicated debt structure on this asset, the Times reported. One of them is the state-owned Bank of China. The other is Goldman Sachs.

Meanwhile, perhaps the two single most important political appointments that Trump has made are both former senior officials at Goldman Sachs. Trump’s Treasury Secretary will be Steve Mnuchin, a former Goldman partner. Steve Bannon, his campaign’s CEO and now a senior counsel at the White House, also accumulated some of his wealth as a Goldman banker. Trump is expected to name Goldman’s president, Gary Cohn, to direct the National Economic Council.

Mnuchin (Trump’s economic policy maker) and Bannon (his chief strategist at the White House) will hold immense sway over the incoming administration’s economic and financial statements and decisions. Every statement a president makes affects financial markets. His two closest financial and domestic policy advisors will inform those statements.

These various conflicts are all obviously interconnected. And while it isn’t likely that a trio of former senior officials at Goldman Sachs—which, again, holds the debt on the Trump organization’s largest obligation—is going to forge important White House policy that directly benefits their former company, the appearance of a conflict is still there regardless. This sort of potential conflict is precisely why Hank Paulson sold his Goldman shares before becoming former President George W. Bush’s Treasury secretary.

Whenever Trump does or says anything that affects the banking industry or financial markets, he will be faced with the obvious question. Did he say something knowing that it might affect the bottom line of his business interests—specifically to one that holds the debt on a property that undergirds the net worth of his business organization?

Trump has begun to call out companies by name when they offshore jobs—essentially using his bully pulpit to condemn efforts to relocate jobs to countries where wages are lower. Every large banking and financial company, including Goldman Sachs, has moved thousands of jobs to India and elsewhere. Will he attack them, too?

This singular business and political conflict uniquely intersect with Trump’s personal financial debt, his net worth, his brand name on an iconic real estate property in the heart of New York City and two of his most important financial and domestic policy advisors.

Because so much of his net worth is tied up in signature real estate properties, Trump’s business interests are uniquely susceptible to demands from banking interests. This is why Trump has a Goldman Sachs problem—and why he should divest his business assets completely before he takes office.