In the aftermath of the January 6, 2021 Capitol attack, many corporations distanced themselves from former President Donald Trump. However, amid this corporate exodus, Axos Financial emerged as a significant financial supporter of Trump and his enterprises. This California-based mid-sized bank has provided over $400 million in loans to Trump and his companies, positioning itself as a key player in the political and financial landscape. Despite facing criticism and short-seller accusations, Axos has continued to thrive, with its stock reaching record highs following the November 2022 US presidential election. The bank's willingness to cater to controversial clients and its rapid growth under CEO Gregory Garrabrants have made it a subject of both admiration and scrutiny.
Following the Capitol attack, numerous companies reconsidered their ties with Trump, including long-time ally Deutsche Bank, which ceased all business relations. In contrast, Axos Financial saw an opportunity and stepped in to fill the void. Founded in 2000 as Bank of Internet USA (BoI), the institution underwent a series of transformations under Garrabrants' leadership, expanding into clearing and investments. By rebranding as Axos in 2018, the bank positioned itself as a forward-thinking financial institution willing to take on clients that other banks might hesitate to serve. One such client was the Trump Organization, which received substantial financial support from Axos during critical moments, including looming loan repayments for properties like Trump Tower and the Trump National Doral hotel in Miami.
Axos' largest individual shareholder, billionaire Don Hankey, further solidified the bank's connection to Trump. Hankey, known for his success in sub-prime auto financing, played a crucial role by posting a $175 million bond to help Trump block a civil fraud judgment. Additionally, both Hankey and Garrabrants have made political contributions to Trump and the Republican Party, strengthening the ties between the bank and the former president. This alignment has not only benefited Trump but also boosted investor confidence in Axos, driving its stock price to unprecedented levels.
Despite its successes, Axos has faced challenges, including legal battles and regulatory scrutiny. From 2015 to 2017, the Securities and Exchange Commission (SEC) investigated the bank over alleged conflicts of interest and auditing practices. Axos attributed these issues to a smear campaign orchestrated by short-sellers. The SEC eventually closed the investigation without taking enforcement action. More recently, short-seller Hindenburg Research accused Axos of lax underwriting standards and risky loan portfolios. While these allegations initially caused a dip in stock prices, investors quickly regained confidence, suggesting that Axos' strong financial performance and strategic positioning continue to outweigh the criticisms.
The resilience of Axos Financial and its pivotal role in supporting Trump's financial endeavors highlight the complex interplay between politics and finance. As the bank continues to grow and expand its services, it remains a notable example of how unconventional strategies can lead to significant success in the banking sector. The ongoing relationship between Axos and high-profile clients like Trump underscores the bank's commitment to providing financial solutions even in challenging circumstances, setting it apart from more cautious competitors.