The subprime-loan billionaire behind Donald Trump’s $175mn bond


Don Hankey, a Los Angeles-based subprime auto loan billionaire, has said two of his biggest early-career mistakes were to only do business with honest people and to trust his gut to pick those people out.

“I would sit down and look somebody in the eye and think I could determine if they were honest or not,” Hankey last year told the Los Angeles Business Journal, which ranked him as the sixth-wealthiest person in Los Angeles. “I got burnt several times.”

Hankey may be playing with fire again. Earlier this week, Knight Insurance Group, one of more than a handful of companies that make up Hankey’s financial empire, put up a $175mn bond for Donald Trump, an amount the former president had to post to the court in order to avoid property seizures while he appeals against a near half-billion-dollar judgment against him and his companies.

Details of the bond arrangement were not disclosed. A Hankey Group spokesperson did not return a request for comment.

The Hankey Group’s biggest business, Westlake Financial, is the US’s largest lender to independent, and often used, car dealerships, allowing the dealers to offer loans directly to car buyers at the time of purchase. Hankey’s businesses flourished during the coronavirus pandemic, as consumers, helped by government assistance, were flush with cash, and car prices were driven up by supply chain problems.

More recently, Westlake and Hankey’s other companies have used large data models and artificial intelligence to push their subprime lending business into healthcare, elective medical procedures and jewellery.

The Hankey Group is not public but is a large issuer of asset-backed securities to fund its lending. It had $23.4bn in assets at the end of last year, up from $12bn at the end of 2019. It had $4.6bn in revenue last year and nearly 3,500 employees, according to its website.

Hankey has backed prior Trump campaigns and gave more than $100,000 to the Republican National Committee in the 2016 election cycle. He is also the biggest individual shareholder, with a $200mn stake, in Axos, an internet-only bank that is now one of Trump’s largest direct lenders.

Hankey told the Associated Press that Knight underwrote Trump’s bond for business reasons, not political ones. The Los Angeles financier said his company approached the former president’s financial advisers last week, after an appeals court in New York lowered the amount Trump would have to put up during the appeal against the full $464mn, which included interest.

Hankey — whose net worth is estimated to be $7.4bn, according to Forbes — told the AP the former president put up cash and bonds as collateral for the judgment bond, but did not say how much or what Knight charged for the bond.

Before the bond amount was lowered, Trump’s lawyers said the former president would have to put up collateral worth 120 per cent of the bond and pay as much as a 3 per cent underwriting fee.

They said that in their efforts to secure the larger bond they had approached 30 surety companies — including Allianz, Axa, Berkshire Hathaway, Chubb, Munich Re, Swiss Re and Zurich — via four separate brokers, to no avail.

In the past, some of Hankey’s companies have been accused of not being fully honest with customers. In 2015, the US Consumer Financial Protection Bureau ordered two of Hankey’s companies, Westlake Services and Wilshire Consumer Credit, to collectively pay nearly $50mn in restitution and fines.

The agency had accused it of using deceptive lending and debt collection practices, including falsely telling some customers who had already had their vehicles repossessed that a partial payment could get their car back, when it could not, and others that their car was about to be repossessed, when it was not, in order to speed payments. Westlake and Wilshire agreed to the CFPB’s action without admitting or denying the allegations.

“There’s no excuse for lying to your customers,” said then-CFPB director Richard Cordray in a statement at the time of the settlement.

Hankey has previously addressed his critics by saying he has cracked down on abuse at his company. It is better for the borrower to be able to buy a car, even with a high interest rate loan, than to be turned away, given how important it is to employment to have a vehicle in so many parts of the country, he has said.

“Let’s say you have somebody with bad credit, so they either have to pay 18 per cent interest or not get a car at all. Are we better off just not giving them a car?” Hankey said in a 2020 radio interview. “There’s good and there’s bad to it, but I think the good [out]weighs the bad.”



Also Read More: World News | Entertainment News | Celeb News

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

US sanctions Israeli group for attacking Gaza aid convoys | Israel-Palestine conflict News

Washington, DC – The United States has imposed sanctions on a “violent…

European markets take a hit as Macron calls snap election

This article is an onsite version of our Disrupted Times newsletter. Subscribers…

AP Week in Pictures: Europe and Africa

May 24-30, 2024 South Africans took to the polls, Britain’s political parties…

Australia gives Ukraine $250 million in military aid at NATO

Australia’s $250 million package takes total Australian military assistance to Ukraine to…