WASHINGTON — No financial institution envies the dilemma Duetsche Bank and Capital One are in this week, with House Democrats ordering them to share records of the Trump Organization's business dealings, and now the Trump administration suing both banks to block the congressional subpoena.
The companies are in a lose-lose situation. Congressional subpoena powers are sweeping, so a denial of the lawmakers' request seems unlikely. But obeying the subpoena means disclosing confidential information about perhaps the institutions' most powerful client.
“They have obligations to their account holders to keep their bank records private, but at the same time that doesn’t prevent them from complying with a lawful process,” said Scott Pearson, a partner at Ballard Spahr.
President Trump, the Trump business organization and his three oldest children — Donald Trump Jr., Ivanka Trump and Eric Trump — asked a U.S. District Court judge to permanently bar Deutsche Bank and Capital One from complying with the subpoena, as well as a preliminary injunction to halt the subpoena while the matter is before the courts.
Legal experts question whether the lawsuit can be successful in preventing the two banks from handing over records, but observers say the litigation may temporarily relieve some of the pressure on Deutsche and Capital One if a judge grants at least a temporary injunction.
“It is very, very difficult to overturn the subpoena because one of Congress’ functions is to investigate, and as a third party you can get caught in the middle,” said Joe Lynyak, a partner at Dorsey. “The fact that they are suing to stop the enforcement of the subpoenas — that really does take the pressure off of the banks in that they can sit by and wait for the courts.”
But most believe that the banks will ultimately cooperate with the House committees investigating the president's businesses. The subpoenas were issued by House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and House Intelligence Committee Chair Adam Schiff, D-Calif.
“Unlike this situation, it can at times be difficult for Congress to demand documents from companies that are unwilling to cooperate with the committee," said J.W. Verret, a George Mason University law professor and former chief economist for the Financial Services Committee, who worked on the Trump administration's transition team. "These banks, I think, are inclined to cooperate with the committee if they are issued subpoenas.”
The Trump family is arguing that the investigations are only politically motivated, personally invasive, and an overreach by Congress. The lawsuit claims the congressional investigations don’t serve a legitimate legislative purpose, which they say the Constitution requires in order to conduct a probe into the banks.
“Investigations are legitimate insofar as they further some legitimate legislative purpose. No investigation can be an end it itself. … The subpoenas to Deutsche Bank and Capital One lack any legitimate legislative purpose,” the suit alleges.
But Verret said there is a high bar to argue that a congressional subpoena, even one that is politically motivated, goes beyond the committees' authority.
“The complaint is essentially groundless," he said. "It rests on the argument that Congress is political, [but] if that was true no congressional subpoenas would have ever been upheld because they were all political.”
Lynyak said that Congress likely has the authority to investigate Deutsche and Capital One, but that the suit could significantly delay the House Democrats' probes if the judge grants a temporary injunction.
“If you accept the fact that Congress has clear authority to be able to issue the subpoenas” the lawsuit would likely only delay the House probes “not more than a few months,” Lynyak said. “If the Trump-related parties try to appeal any ruling, even if it’s not well supported in the law, it could take well over a year, moving us into the next election cycle.”
Waters and Schiff said as much in their response to the lawsuit.
“This lawsuit is not designed to succeed; it is only designed to put off meaningful accountability as long as possible," the two Democrats said in a joint statement. "Trump has already said publicly that he is fighting all of the subpoenas from Congress, and that he does not respect Congress’ role as a coequal branch of government. This unprecedented stonewalling will not work, and the American people deserve better.”
Pearson said that without a preliminary injunction, there is nothing to stop the banks from complying with the subpoena.
“If they don’t seek an injunction, it’s not going to stop the banks from complying with the subpoena if there is an assessment that they have to comply,” he said.
But others said the lawsuit makes sense insofar as financial institutions should abide by the principle of maintaining their clients' privacy.
“I think it’s a really smart move by the Trump Organization and the family to do this,” said Aaron Cutler, a partner at Hogan Lovells. “They should pursue all legal avenues they have to prevent information that their banks should be keeping confidential. … That being said, Congress has the right to subpoena and has really broad subpoena power.”
A spokesperson for Deutsche Bank said it intends to continue to submit materials to all parties investigating.
“We remain committed to providing appropriate information to all authorized investigations and will abide by a court order regarding such investigations,” the spokesperson said.
Representatives for Capital One did not respond to a request for comment.
