4 ms·

There are a few issues at play here: 1) Deutsche is a "too big to fail bank" in Germany, 2) This fine is being imposed by the USA 3) Deutsche is already teet

There are a few issues at play here: 1) Deutsche is a "too big to fail bank" in Germany, 2) This fine is being imposed by the USA 3) Deutsche is already teetering as it without this fine. See: https://www.ft.com/content/9a018afe-3e37-11e6-9f2c-36b487ebd80a https://www.ft.com/content/9a018afe-3e37-11e6-9f2c-36b487ebd... 4) It's borrow costs, which banks live and die by, are increasing due to all of this which leads to pretty awful feedback cycle that it may have trouble getting out of without ending up being owned by the German government. The problem for the world si that Deutsche has a "shit load" of derivative exposure, now in today's world, almost all banks have some, but Deutsche, under Boaz Weinstein took bank derivative exposure to a whole new level and they've been trying to dig themselves out of this hole for the past 5=7 years. http://www.cnbc.com/2016/07/15/deutsche-bank-a-ticking-time-bomb.html http://www.cnbc.com/2016/07/15/deutsche-bank-a-ticking-time-... The world's financial community can't really let Deutsche fail as this would trigger a whole whach of ISDA agreements, sort of how in 2011, Greece's banks failed, but they didn't "fail" in the strictly legal sense that would trigger default clauses on their agreements. Who would have thought that the German's would be the ones to start the next financial collapse:) No as to the fine, they aren't anywhere near the first bank to be charged and fined and all the others had their fines cut atleast in half. Just incase you don't think this is terribly serious..... Deutsche Bank's 5 year default probability just jumped up to 15.8%. For a bank, that's huge, no other large bank is anywhere close to that!!!

divbyzer0 10y ago
I wonder if this to reciprocate for the decision by the EU against Apple to the tune of $14 billion. Numbers seem very similar. Coincidence?
- pkaye 10y ago
  The US was asking other banks for similar amounts since early on but they settle for less... "In 2014, the DoJ asked Citigroup (C.N) to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion."
- bogomipz 10y ago
  Goldman Sachs was also fined for the same, they negotiated it down to 5 billion. So it's not related to recent events with Apple. http://www.nytimes.com/2016/01/15/business/dealbook/goldman-to-pay-5-billion-to-settle-claims-of-faulty-mortgages.html http://www.nytimes.com/2016/01/15/business/dealbook/goldman-...
mtgx 10y ago
At this point I'd much rather see these banks keep their $5-$10 billion in fines, but have at least the top 10 executives imprisoned. That would be a way better incentive for the banks to stop defrauding people, and they wouldn't lose nearly as much money, so if they are indeed in financial troubles, they can survive it. What I definitely don't want to see anymore is letting big banks get away without any punishment "because that would endanger the economy." It's ultimately a poor excuse for not punishing criminal behavior, because failure to punish is defacto condoning of the crime, and it will happen again in the future. If you want to stop that, then some form of effective punishment must be done.
- maxxxxx 10y ago
  Absolutely right. It's pretty clear that the fines don't prevent misbehavior.
  - thefastlane 10y ago
    the primary knock-on effect is probably that it accelerates the process of offshoring back- and middle-office teams to less expensive jurisdictions.
- javajosh 10y ago
  Putting aside the personal bias that very much agrees with you, if you look at a bank as a machine, then the "top 10 executives" are very expensive, difficult-to-replace components of the machine. I don't know where you find people to run a bank of that size and complexity, and perhaps it's easier than I think, but I'd like to get a sense of how much damage those removals would make. Additionally, would making corporate leadership personally, criminally liable for the banks actions make finding a replacement even harder? (Of course, that's not a great argument since any standard you apply is going to make it harder to find a replacement. E.g. if we say "no sex offender can be a teacher" then it makes it harder to find teachers, but no-one would argue with that.)
pinaceae 10y ago
the DB has also massive legal issues all over the globe - the US one just one of them. bribery in Russia, fraud around CO2 certificates, the list is pretty big. you can argue that the past dual-leadership of Ackermann and Jain where heading a criminal enterprise. after VW the second large German fuckup.
- allendoerfer 10y ago
  I am all for fining bad behaviour. What I do not like the resulting attitude and morale high ground. The US clearly started the mess in the banking world and took the whole world down by selling it their housing loans. German bankers of the early 90s had no idea about the whole show, but were stupid enough to drink their Kool-Aid. VW has been building smaller cars with lower mileage than its US counterparts for decades but now somehow is the prominent environmental offender? "Bribery in Russia" and the German bank is the one that needs to be called out for this? Come one.
  - pinaceae 10y ago
    The US fine is only for shenanigans pulled in the US, other banks in US paid even higher fines (JPMorganChase and BoA settled for 13-17bn each). The other investigations are handled by other entities in Europe and Russia. And there are two levels at play: breaking the law in the first place and then being stupid enough to be caught. See here for details: https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies It is a shit-show of epic proportions.
  - pinaceae 10y ago
    and apologies, but this guy really is on my shit list: https://en.wikipedia.org/wiki/Josef_Ackermann https://en.wikipedia.org/wiki/Josef_Ackermann All of this happened under his CEO tenure, he collected millions of EUR in salary and bonuses, resigned in 2012. Runs the WEF, Bilderberg group, etc. An expert. But Capone and Escobar got hunted down. This guy is not in jail. A typical Swiss banker.
allendoerfer 10y ago
The funny part about stricter capital requirements is that banks somehow have to get that capital, which means they have to increase risks to lower risks.
- amitdeshwar 10y ago
  Or dilute shareholders by selling stock.
shaqbert 10y ago
Settlements are there to reduce the workload of an underfunded legal system that is incapable of coming to terms with the byzantine amount of federal and state regulation. I wish the judge would prevent a settlement here and have the case tried. And put some evil bankers behind bars. And put the DoJ into its place in coming up with these outrageous amounts instead of a list of names of folks who did bad stuff! And their bosses as well for failing to control their thundering herds.

divbyzer0 10y ago

I wonder if this to reciprocate for the decision by the EU against Apple to the tune of $14 billion. Numbers seem very similar. Coincidence?

pkaye 10y ago
The US was asking other banks for similar amounts since early on but they settle for less... "In 2014, the DoJ asked Citigroup (C.N) to pay $12 billion to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7 billion."
bogomipz 10y ago
Goldman Sachs was also fined for the same, they negotiated it down to 5 billion. So it's not related to recent events with Apple. http://www.nytimes.com/2016/01/15/business/dealbook/goldman-to-pay-5-billion-to-settle-claims-of-faulty-mortgages.html http://www.nytimes.com/2016/01/15/business/dealbook/goldman-...

mtgx 10y ago

At this point I'd much rather see these banks keep their $5-$10 billion in fines, but have at least the top 10 executives imprisoned. That would be a way better incentive for the banks to stop defrauding people, and they wouldn't lose nearly as much money, so if they are indeed in financial troubles, they can survive it. What I definitely don't want to see anymore is letting big banks get away without any punishment "because that would endanger the economy." It's ultimately a poor excuse for not punishing criminal behavior, because failure to punish is defacto condoning of the crime, and it will happen again in the future. If you want to stop that, then some form of effective punishment must be done.

maxxxxx 10y ago
Absolutely right. It's pretty clear that the fines don't prevent misbehavior.
- thefastlane 10y ago
  the primary knock-on effect is probably that it accelerates the process of offshoring back- and middle-office teams to less expensive jurisdictions.
javajosh 10y ago
Putting aside the personal bias that very much agrees with you, if you look at a bank as a machine, then the "top 10 executives" are very expensive, difficult-to-replace components of the machine. I don't know where you find people to run a bank of that size and complexity, and perhaps it's easier than I think, but I'd like to get a sense of how much damage those removals would make. Additionally, would making corporate leadership personally, criminally liable for the banks actions make finding a replacement even harder? (Of course, that's not a great argument since any standard you apply is going to make it harder to find a replacement. E.g. if we say "no sex offender can be a teacher" then it makes it harder to find teachers, but no-one would argue with that.)

pinaceae 10y ago

the DB has also massive legal issues all over the globe - the US one just one of them. bribery in Russia, fraud around CO2 certificates, the list is pretty big. you can argue that the past dual-leadership of Ackermann and Jain where heading a criminal enterprise. after VW the second large German fuckup.

allendoerfer 10y ago
I am all for fining bad behaviour. What I do not like the resulting attitude and morale high ground. The US clearly started the mess in the banking world and took the whole world down by selling it their housing loans. German bankers of the early 90s had no idea about the whole show, but were stupid enough to drink their Kool-Aid. VW has been building smaller cars with lower mileage than its US counterparts for decades but now somehow is the prominent environmental offender? "Bribery in Russia" and the German bank is the one that needs to be called out for this? Come one.
- pinaceae 10y ago
  The US fine is only for shenanigans pulled in the US, other banks in US paid even higher fines (JPMorganChase and BoA settled for 13-17bn each). The other investigations are handled by other entities in Europe and Russia. And there are two levels at play: breaking the law in the first place and then being stupid enough to be caught. See here for details: https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies It is a shit-show of epic proportions.
- pinaceae 10y ago
  and apologies, but this guy really is on my shit list: https://en.wikipedia.org/wiki/Josef_Ackermann https://en.wikipedia.org/wiki/Josef_Ackermann All of this happened under his CEO tenure, he collected millions of EUR in salary and bonuses, resigned in 2012. Runs the WEF, Bilderberg group, etc. An expert. But Capone and Escobar got hunted down. This guy is not in jail. A typical Swiss banker.

allendoerfer 10y ago

The funny part about stricter capital requirements is that banks somehow have to get that capital, which means they have to increase risks to lower risks.

amitdeshwar 10y ago
Or dilute shareholders by selling stock.

shaqbert 10y ago

Settlements are there to reduce the workload of an underfunded legal system that is incapable of coming to terms with the byzantine amount of federal and state regulation. I wish the judge would prevent a settlement here and have the case tried. And put some evil bankers behind bars. And put the DoJ into its place in coming up with these outrageous amounts instead of a list of names of folks who did bad stuff! And their bosses as well for failing to control their thundering herds.