Three months ago, the news that Deutsche Bank would fight a Department of Justice penalty of $14 billion served as a cautionary tale about lending practices leading up to the 2008 financial-sector collapse. After the election, it might serve as a different kind of cautionary tale to the incoming administration of Donald Trump. Bloomberg reported yesterday on the significant relationship between Deutsche Bank and the Trump business empire, including the bank’s need to restructure debt offered on Trump’s personal guarantee:

Now that guarantee — employed to extract better terms on hundreds of millions of dollars of loans to the Trump Organization — is at the center of a delicate loan-restructuring discussion at Deutsche Bank AG, which is under investigation on several fronts by the U.S. Department of Justice.

The bank is trying to restructure some of Trump’s roughly $300 million debt as part of an attempt to reduce any conflict of interest between the loan and his presidency, according to a person familiar with the matter. Normally, the removal of a personal pledge might lead to more-stringent terms. But there is little normal about this interaction. Trump’s attorney general will inherit an investigation of Deutsche Bank related to stock trades for rich clients in Russia — where Trump says he plans to improve relations — and may have to deal with a possible multibillion-dollar penalty to the bank related to mortgage-bond investigations. …

“When you have political appointees making decisions about banks that the president owes a lot of money to, it looks terrible,” said Richard Painter, a law professor at the University of Minnesota who was the chief ethics lawyer for President George W. Bush. “The U.S. government is dealing with regulatory and criminal issues with the big banks all the time, and if he owes them a lot of money, there might be an incentive to favor less regulation and less enforcement for the banks.”

It’s not the first time the issue with Deutsche Bank has come up. Ten days after the election, former FEC chair Trevor Potter — a Bush appointee — argued that a failure of Trump to completely divest his business interests would create impossible-to-resolve appearances of conflicts. It would certainly send a signal to foreign governments that they could buy access to policymakers at the highest levels:

Although Trump has not released his tax returns, as a candidate he was required to file a personal financial disclosure form that describes his assets and businesses in broad dollar ranges. The press has added some additionalinformation to this picture. As a result, we know that the Trump Organization does business in dozens of countries around the world and is seeking to do business in others. It has arrangements with foreign governments and foreign banks, some of which are owned by foreign governments. Some of its investments are dependent on foreign loans, including from the Bank of China and Deutsche Bank.

Trump has said he intends to penalize China for its trade policies. That could prompt the Bank of China, owned by the Chinese government, to threaten to pull its loans that are financing Trump buildings. If so, would the president back down? Likewise, Trump knows that Deutsche Bank financing is important to his business. The bank, even before Trump takes office, is reported to be in trouble. What happens if the Treasury Department recommends that the U.S. government decline to prop it up? A major European bank failure could have an adverse impact on Trump’s real estate investments across the board. If he decides to rescue Deutsche Bank (even if that is the “right” policy decision), it will appear as if he did so to benefit his business interests.

Neither of those scenarios requires any leaps of imagination; they are right out of today’s news. But say Trump is sworn in as president and remains the owner of a vast business run by his children. Some foreign businesses and foreign leaders will want to cozy up to the Trump family, because that is how they are used to doing business and conducting foreign policy. The children will get a raft of proposals for new hotels and golf courses and other investments in places that will offer very favorable terms: cheap land, no red tape in the permitting process, low-interest loans for construction, a guaranteed large management fee in return for the Trump name on the new enterprise.

The action by the DoJ against Deutsche Bank makes the issue even more acute, even with the “no new deals” pledge from Trump about his business empire. Other financial institutions managed to get their fines lowered on appeal (Citigroup went from $12 billion to $7 billion), but how would that look if it took place after January 20th? It would appear that Trump’s connections to the bank influenced the DoJ into reducing the penalty, especially if it helps Deutsche Bank in restructuring the Trump debt it holds. Even if everyone in the Trump administration was squeaky clean on it, such an outcome would unleash a political firestorm, and for good reason.

That is the real benefit of a blind trust, as I argue in my column for The Fiscal Times — as a shield against such attacks, and a way to avoid depleting one’s political capital on defenses against them. The alternative under consideration at the moment, discretionary trusts, simply won’t cut it as a political shield:

Richard Painter, who served as George W. Bush’s ethics lawyer, told Politico that a discretionary trust would be “highly inappropriate,” and leaving existing assets in place while determining policy would constitute “a violation of at least the spirit of the rules.” That might still be a problem even if his children buy him out completely. In one potential demonstration of this futility, foreign governments have already begun toadying up to Trump through his resorts. We can expect more of these efforts after the inauguration.  In short, we have a mess that won’t be quickly or easily resolved.

Will voters care enough about this to damage his political capital? So far it seems to have done little to dampen enthusiasm for Trump among his supporters, and a new NBC/Wall Street Journal poll suggests he’ll have a honeymoon with a broader range of voters as he takes office.  After all, over sixty-two million voters voted for the businessman even with the potential for these conflicts already apparent, and they may be inclined to give Trump a pass – at least until they suffer some disillusion over his governing choices.

That may come sooner rather than later. Trump says he wants to “drain the swamp” and make dramatic changes in the way Washington does business. That’s precisely why Trump will need to put his interests into a blind trust – to protect himself from the potential backlash. If Trump alienates enough voters and members of Congress with his policies, those conflicts of interest will offer a very handy excuse to push for impeachment under the Emoluments Clause of the Constitution.

Voters gave Trump the presidency – but they don’t want Trump to give them the business. Trump has to choose whether he wants to be a mogul or be a president, and he needs to make that choice now.

Even if Trump does make that decision, it will likely take months to unwind his business affairs, if not years, unless he allows his children to buy him out entirely and they stay out of any formal roles in the White House. If Trump does undertake a complete divestiture and blind trust of his personal wealth in good faith, voters, the media, and Congress will need to exercise some patience with the process. But Trump needs to make those intentions clear as soon as possible and preferably have the process well under way by January 20th.

Update: Late last night, Deutsche Bank settled with the DoJ for $7.2 billion. That solves part — but not all — of Trump’s potential conflict:

Congressional Democrats say they intend to target Trump’s heavy obligations to the bank as a chief vulnerability during his presidency. Sen. Richard Blumenthal (D-Conn.), a member of the Senate Judiciary Committee, vowed before the settlement announcement to make Deutsche a major issue during confirmation hearings for Sen. Jeff Sessions (R-Ala.), Trump’s attorney general-designate.

“Despite this settlement, the criminal investigation of Deutsche Bank and culpable individuals‎ must continue — and it should be done by independent counsel,” Blumenthal said in a statement. “Only an independent counsel can investigate and prosecute vigorously and impartially, in light of conflicts of interest created by the enormous debt owed by Donald Trump to the bank. This settlement can hardly be the end of efforts to hold the bank and its leaders accountable for the crimes and harm they caused.” …

Deutsche is now the biggest publicly known lender to Trump businesses, with four outstanding loans tied to Trump’s most high-profile properties, according to financial-disclosure filings released in May.

Deutsche lent $170 million last year for the new Trump International Hotel in Washington, or about 80 percent of what the Trump Organization said it spent toward redevelopment.

Trump also borrowed $125 million for his Trump National Doral golf course in south Florida and $69 million for the Trump International Hotel and Tower in Chicago. All of those loans come due by 2024, during what could be Trump’s second term in office.

The issue of prosecution has been taken off the table for now, but that’s a lot of leverage Deutsche Bank holds on Trump and vice versa, literally and figuratively.