Table of Contents
Updated: 2024-03-11 (style)
Update: 2024-03-14
Global operations are in Switzerland; US operations are in New Jersey, and it is the global company that is listed on the NYSE.
Chubb wrote to shareholders: The surety bond is fully collateralized
The called a 2022 impairment from the separation of its Russia operations as de minimis.
Confirmation Bias
Still a man believes what he wants and disregards the rest. Paul Simon
According to Claude,
Confirmation bias is a common cognitive bias that affects how people process and interpret information. It refers to the tendency to search for, favor, and recall information in a way that confirms or supports one's pre-existing beliefs or hypotheses, while giving less attention to information that contradicts those beliefs.
In other words, people are more likely to notice, focus on, and remember information that aligns with what they already think, and they may unconsciously filter out or dismiss evidence that challenges their opinions. This bias can lead to overconfidence in personal beliefs and can make it difficult for people to consider alternative viewpoints.
Here are a few examples of confirmation bias in everyday life:
- Politics: People tend to seek out news sources and information that align with their political beliefs while dismissing or ignoring information from sources with opposing viewpoints.
- Health: Someone who believes that a particular diet is healthy may focus on articles and studies that support this belief while downplaying evidence that suggests otherwise.
- Stereotypes: Confirmation bias can reinforce stereotypes because people tend to notice and remember instances that confirm the stereotype while dismissing examples that contradict it.
Confirmation bias can have significant consequences, as it can lead to poor decision-making, misinterpretation of data, and a failure to consider important information that contradicts one's beliefs. To minimize confirmation bias, it's essential to actively seek out diverse perspectives, question one's assumptions, and approach information with an open and critical mind.
According to me, a conspiracy theory is confirmation bias taken to its logical end: all facts confirm the theory even when they are just coincidence.
The Trump surety bond has dirty Russian fingerprints?
A large body of evidence suggests that Trump
- has Russian connections,
- is likely susceptible to manipulation
- has a high degree of cupidity
- exaggerates everything, particularly his wealth
- is "house poor"
- claims to have \$400 million in petty cash, but it might be closer to \$90 million
- has most of his wealth tied up in mortgaged real estate
- facing a tough market for commercial real estate
- has a thin market for golf courses at any time all the time
- has sentiment attitudes to his properties
- litigates everything to the end whether his lawyers thing the chances are good or not
- has to deposit cash or post a surety bond to appeal the current defamation judgment in the Carroll case
- knows that his political base doesn't care about Russia
- thinks he can get away with anything
Therefore, it only makes sense that he would look for a Russian source of funding. Case proved.
Not so fast
There's more context.
- He's time constrained and has failed to get a special exception
- If he can't deposit cash or cash equivalents from cash on hand, he has to borrow
- He is not creditworthy, so he has to get a secured loan
- He has some personal property, but apart from some gold, not enough
- Trump Force One, his private Boeing 757 is probably the largest single item of personal property
- The 757 has been reported as worth \$100 million, but the market value on vintage versions is less than \$3.5 million
- The other airplane has been on sale for "best offer" over a year
- The helicopters he's already sold or may still have are worth only about \$300,000
- He can get a secured loan only on real property that is not already encumbered
- He might be able to borrow against an assignment of rents
- There are only a handful of major surety companies willing to take real property as collateral
- His office and retail properties are in a very difficult market environment
- His golf clubs are in a thin market
- Loan covenants on existing real estate backed borrowings may prevent new borrowings
- Major real estate deal take a longer time than available to close than other types
- A sale of real estate to raise cash directly could trigger an adverse series of tax consequences
- The first bond due was now, the approximately \$83 million on the Carroll case
Therefore, a surety bond was his only realistic option and his stocks and bonds are the most likely sources of collateral.
Trump has offered a surety bond from Federal Insurance Company, a subsidiary of Chubb, a large international finance and insurance company with a US subsidiary headquartered in New Jersey that is publicly traded.
FIC
- is on the Treasury Department Circular 570 list of approved providers of surety bonds
- has been in the business for over 100 years, one of an elite tier of financial institutions of that antiquity
- has ongoing reporting obligations to Treasury
- is subject to reporting and examination requirements of federal and New York (and other) regulators
- is required to file suspicious activity reports on large transactions including potential money laudering
- is institutionally conservative
Chubb
- has two subsidiaries writing lines in Russia
- has an inside director of Russian origin who once ran another insurer's (AIG) operations in Russia
- has a PAC that has contributed to more Democrats than Republicans
- has a CEO with interests directed toward east Asia and who has decried domestic nationalism
- has a CEO who was appointed by Trump to a trade advisory group focused on China
- has a CEO whose father, nicknamed Hank, who shares a last name with a Henry Greenberg who was a Russian citizen involved in the 2016 election by meeting with Roger Stone; he also shares a last name with Alan Greenberg, the late CEO of the former Bear Stearns who had banking relationships with Trump. In addition an imvestment vehicle he controlled invested in a Russian bank, which subsequently failed. He also contributed to a 2016 PAC in support of Jeb Bush
What's next?
On Monday, March 11, 2024, Federal District Court Judge Lewis Kaplan approved an agreement to the parties to modify the bond to reduce the Court of Appeals decision to affirm the judgment before a claim can be presented from 60 days to 30 days.
Other possible objections were not raised
- Although FIC is on the Treasury Circular 570 approved list it might be over its limit
- The bond amount may not be adequate
- The bond may be conditioned contrary to the judgment
Judge Kaplan approved the bond. The plaintiff is better protected against a possible Trump bankruptcy because the FIC bond will be unaffected.
Further procedings
The FIC bond does not extend to the inevitable follow-on application to SCOTUS. The rules do provide for a separate surety bond in the discretion of the Court of Appeals if it grants a stay of judgment to allow Trump to apply for a writ of certioari to the Supreme Court.
That's a big if. Trump would have to convince the panel that an approval of the writ is likely and that Trump will win and he can show that he would not be able to recover any property that Carroll obtains through foreclosure of her judgment lien. A straight face might be possible except for the fact that this is a garden variety tort claim and if there were any questionable due process issues the panel will already have addressed them to its satisfaction. Trump will then attempt to get a stay pending application for a rehearing en banc. When that fails, he'll make the same pitch to the Supremes.
In the meantime, the meter is turning over to the tune of $100K+ per day. Assuming that the circuit panel renders its decision to uphold the judgment in 120 days, there's another $12 million, which is more than his 757 is worth. So, Trump would have to put up a bond for somewhere north of $105 million, if he still has the collateral to get one. Let's say it takes another 30 days for an en banc appeal to be rejected, that's another $3 million. Then, if his petition for writ takes another 30 days, $3 million again. It's not exactly doubling down, if you don't count the additional defamations.
BS/no-BS
