6 ms·

Deutsche Bank Ignored Its CDS Problems Until They Went Away

65 points by dsri 11y ago

dba7dba 11y ago
Ignoring problems until they went away? Sounds like my IT department...
PhantomGremlin 11y ago
I love Matt Levine's articles. He's good at simply explaining the arcana of Wall Street. But when I read this article, I can only say one thing: Why? Why is Wall Street spending all this time and energy in creating all these different securities? I suspect that any excess "profits" or "returns" to be had from them accrue 90% to the bankers and 10% to the muppets funding them. So why do the muppets keep playing this game?
- x3n0ph3n3 11y ago
  Because muppets don't believe they are muppets.
  - a3n 11y ago
    If you look around the table, and you can't find the muppet, ...
- meric 11y ago
  The muppets are fund managers who use other people's money to buy Wall Street securities. People have fund managers because of the law.
  - kennethh 11y ago
    Muppets are usually pension funds, where the people doing the investing want to do it as easy as possible and with high rewards so they get the bonus for doing nothing.
- mathattack 11y ago
  People need to invest their money somewhere. In this case, the sucker would actually have been DB's investors if the worst case ever did happen. (They would have gone under like many other banks - the bailout saved them.) In this case the investors they sold protection to (hedge funds) got better prices than they ordinarily would have, because of the risk hidden in the conduit.
- zzleeper 11y ago
  To expand on the other replies, and based on experience: 1) The way you get to sell products to investors is by promising some sort of alpha: "My fund is less risky, my derivative pays more for the same risk, etc." 2) But magic does not happen in the financial markets (and when it does is through the old stories.. diversification, transferring the risk to those of broader shoulders, etc.) 3) So what you do is HIDE THE RISK. There are many ways to do that, and they usually involve COMPLEXITY. Complexity and opacity are your friends, as they confuse investors who don't realize there is a hidden risk somewhere there, or a scenario you haven't told them (but put on page 350) where if A B and C happen, then he will lose a lot of money. I'm not joking here.. sometimes complexity is good as it allows you to e.g. reduce mismatches in your risks (your income is in USD and expenses in EUR, your debts are long term and assets short term, etc.). However, the ultimate purpose of most complex products is that they allow you to sell stuff that appears better than it really is. And IT WORKS. Everytime. Against millionaires and against folks buying silly combos of insurances plus deposits (forgot their names).
  - PhantomGremlin 11y ago
    > So what you do is HIDE THE RISK I've been rereading my copy of Taleb's Antifragile. He keeps hammering similar points over and over: complexity, risk, opacity, susceptibility to Black Swans, etc. I think I'd be depressed if I worked on Wall Street and the better part of my compensation resulted from peddling all these confusing products. Still, as you point out, sometimes complexity is good. I do understand that.
  - mynegation 11y ago
    These combos are called "structured products"
  - wpietri 11y ago
    And I would almost be ok with this if the complexity-generators understood all their complexity and were using it as a great trick to steal money from idiots. What really scares me is that a) even the complexity-generators can easily miss potential issues, and b) when you throw all this complexity together, nobody has any clue what's going on. And then we wrap it up all with a bow by allowing finance people to alternately claim that a) they are so smart they deserve to personally make millions to billions, and b) they couldn't possibly be held accountable for systemic fuckups, because nobody could possibly have known. I'll accept one or the other, but the combination is incredibly dangerous.
- ddeck 11y ago
  >Why is Wall Street spending all this time and energy in creating all these different securities? The primary purpose of these trades is to offload super senior risk from DB's balance sheet. Super senior risk is the risk that DB retained when it (very profitably) sold various other tranches on a group of assets (typically CDS on a bunch of corporate and sovereign credits). This type of risk is very difficult to sell as the return is very low and most entities they might buy unfunded protection from are likely to not be able to pay in the event that the swap pays out. Offloading that risk through a swap to a conduit like this allows DB to release (expensive) capital/reserves that would otherwise need to hold.
- lmm 11y ago
  It's a regulatory arbitrage. Everyone knows that the risk on those super-senior tranches is basically zero (it would take something like 60% of the world's investment-grade companies going bankrupt for them to actually pay off), but the regulations say that Deutsche would have to hold assets to cover it. So they find some investors who declare that they'll cover it instead, in exchange for a few percentage points, and everybody wins: the investors get (a small amount of) free money, Deutsche can hold fewer assets and use its balance sheet for more profitable things. Even the regulators probably don't mind so much - the regulations are overly simplistic (dare I say populist?) in circumstances like this, and everyone knows that.
  - FeepingCreature 11y ago
    My programmer instinct here is - if the regulations have a problem, let profit fail to be made. Fail early, fail hard, then go fix it. Don't go off operating in an undefined state.
    - lmm 11y ago
      I think anyone who has programmed for a medium- or large-sized organization will be familiar with the experience of getting a stupid technical directive from above (e.g. "this part must be XML") and treating it as an obstruction to be worked around (while technically abiding by the letter of it). It's not an undefined state, it's just a case where the rule is unhelpful.
- deleted 11y ago
  [deleted]
- pjc50 11y ago
  The "muppets" are multi-billionaire asset holders. That money has to go somewhere and they want a return on it, or at least the promise of a return. Quite a lot of financial strangeness can be answered with "where else are you going to put your money?" Western treasury bonds are the safe option, but they're close to negative yields. Spending $1.01 at auction to buy a bond which nominally costs 95c and pays back $1 in five years doesn't look great. So there is a huge demand for "riskless" positive-yielding investments. That's why London (and elsewhere) property continues to shoot upwards in value way beyond the ability of the inhabitants to afford it. That's why Switzerland has negative interest rates. And so on.
Daneel_ 11y ago
Every time I think I know a little bit about economics, I read articles like this and realise I'm playing with wooden blocks while the big boys are playing with space shuttles. ...except they made the space shuttle out of wooden blocks, and they're just pretending really hard that it's going to work.
- mathattack 11y ago
  If you have a small group of brilliant computer scientists, they can create world changing software. How many folks were required to get Snapchat or Youtube off the ground? What happens when this level of genius in small groups is cut loose on financial markets where "Make money is the only goal"? You get these space shuttles. They are so complex because that's all these people ever think about.
  - cm2187 11y ago
    The silicon valley is hardly a counter example of "make money is the only goal". In fact for those who question the compensation of bank executives, the compensation of silicon valley executives should raise a few eyebrows.
  - adwn 11y ago
    > If you have a small group of brilliant computer scientists, they can create world changing software. How many folks were required to get Snapchat or Youtube off the ground? Snapchat is world changing and the work of brilliant computer scientists? Did I miss something? I can only hope that your post was intended to be sarcasm.
    - ccvannorman 11y ago
      I think the meaning is "It only takes a small high powered team to 'change the world'/add tremendous value if they have skills and a good idea." Snapchat is one example of many.
  - pjc50 11y ago
    Youtube owes just as much of its success to an army of lawyers achieving two things: filling up with copyright content without getting sued and/or jailed, and banging codec licensor and standards body heads together until video worked everywhere without wildly unreasonable cost or transcoding for every device.
th3iedkid 11y ago
Long time back i was studying Asset Backed Commercial Papers (ABCP) as a special purpose vehicle conduit and its effects on market runs during the financial crisis. For those who want to understand it , these might possibly help(These are only personal notes.): [part 1]https://medium.com/finance-and-economics-studies/read-note-on-asset-backed-securitization-special-purpose-vehicles-and-other-securitization-issues-a715f980bb1c?source=latest https://medium.com/finance-and-economics-studies/read-note-o... [part 2]https://medium.com/finance-and-economics-studies/asset-backed-securitization-special-purpose-vehicles-and-other-securitization-issues-98e7ad3231f9 https://medium.com/finance-and-economics-studies/asset-backe...
Aloha 11y ago
I hate to use a redditism here, but could someone ELI5 this for me? I got lost somewhere around the first appearance of the word tranch,
- ianpurton 11y ago
  In the financial markets you can buy insurance such that if a company fails e.g. Microsoft, you get a payout. It's called a credit default swap. Deutsche bank sold lot's of this type of insurance. If the markets had turned and some large companies had gone bankrupt they would not have had the means to pay the people who bought this insurance. Basically they took very low quality insurance and re-packaged it as high quality insuarance.
  - Zigurd 11y ago
    Excellent explanation. CDSs are insurance. So why can't you buy the equivalent product from an insurer, labelled and regulated as insurance? Because the capital requirements under insurance regulation would have been prohibitive. So why weren't the banks charged with illegally selling insurance products and/or violating insurance regulations? Because fuck you, peon.
- ddeck 11y ago
  Let me try: Imagine an empty company loans 100 companies $1 each. To get the $100 to loan, that company sells bonds to 2 investors for $50 each. One investor is senior and one is junior. What this means is that if any of those 100 companies default and don't pay back their loan, then the junior investor loses money. The junior investor loses money until their entire $50 is lost, and only then does the senior investor have to suffer loses. The senior investor therefore only has losses if more than $50 of the total $100 loans is lost. This is basic credit tranching in funded format. Unfortunately things get a lot more complicated when instead of $1 loans, we have $1 credit default swaps, which instead of loaning someone $1, you promise to pay them if a 3rd party company defaults. This trade is DB buying protection from a company on a very senior tranche of this type of trade, but they are buying it leveraged, so for example they buy $100 of protection from a company that has $10 of cash inside (provided by the third-party investors), with a promise to pay more if the tranche deteriorates. As far as rationale, the primary purpose of these trades is to offload super senior risk from DB's balance sheet, which they accrued through doing a different type of trade.
randomname2 11y ago
Deutsche Bank is hardly a bank in the traditional sense considering their balance sheet. With $72.8 trillion euro in derivative exposure (the largest in the world, 21x the GDP of Germany) this will have to blow up in a spectacular fashion once one of these counterparties fail: http://imgur.com/MNECKC4.jpg http://imgur.com/MNECKC4.jpg A former Kansas Fed president called them "horribly undercapitalized", with a leverage ratio of 1.63 percent: http://www.reuters.com/article/2013/06/14/us-financial-regulation-deutsche-idUSBRE95D0X620130614 http://www.reuters.com/article/2013/06/14/us-financial-regul...
- cm2187 11y ago
  The notional amount doesn't tell you anything meaningful in term of risk. Say I am Deutsche, you are Citi. I trade a €1bn 10 year interest rate swap with you and then another €1bn 10 year interest rate swap with you in the opposite direction. The risk is exactly zero (the two transactions will be netted to zero in case of an insolvency) and the cash flows will perfectly offset each others. We each have €2bn of notional of derivatives outstanding. Banks like Deutsche aren't in the business of taking large directional derivative bets. They are market makers so the quasi totality of these 72 trillions are offsetting positions, which are mostly collateralised, i.e. each counterparty has to post assets to match the evolution of the value of the derivative in order to keep the credit exposure minimal. With such a massive book, there will be residual risks all over the place but 72 trillion is a meaningless number for assessing them.
  - retube 11y ago
    Absolutely correct. Notional is an absolutely meaningless figure. If anything it is comparable to the total notional of derivatives ever traded: contracts are rarely torn up (1), more usually offsetting derivatives are entered into in order to cut the exposure. And anyway notional tells you nothing about the risk or exposure. 1bn of 30y is a lot riskier than a 1bn of 1y etc. 1 - End customer trades do sometimes get torn up. Also trade compression services between street counterparts also result in bulk tear-ups from time to time. But still the vast majority of trades are legacy and largely offset each other.
  - 11y ago
webtards 11y ago
The money moves around and around and around (notionally) a dizzyingly large number of times because the more opaque the process and end product, the less immediate introspection it receives, the less well the average Joe can understand it, and the firm can continue 'alchemy'. Kudos to the regulators for the arduous task of unravelling the large ball of string and following it to the conclusion!
- wpietri 11y ago
  It reminds me a lot of large code bases. At some point people face a choice between a) forcing sufficient simplicity and clarity that one has a chance of understanding what's going on, and b) saying "fuck it" and letting complexity metastasize to the point nobody really understands what's going on. The difference, of course, is that with software the opaqueness is pure cost. Whereas in the financial markets the opaqueness is often a profitable resource from somebody.
dunkelheit 11y ago
The insurance in question would only pay off under some very improbable and dire circumstances. And under these circumstances the chances of getting a payoff are rather slim because, you know, the world is crashing and burning. Some time during the crisis the risk became very real which was reflected in the market prices of credit protections. But DB and "investors" continued to act as if the risk was small. What I don't get is who paid for that risk in the end. I suspect it was the government which bailed everyone out with public money so that the doomsday scenario was never realized.
zemanel 11y ago
Off topic but this reminded me of a movie i saw last year, "Blackbox BRD" (http://en.m.wikipedia.org/wiki/Black_Box_BRD http://en.m.wikipedia.org/wiki/Black_Box_BRD) which relates to Deutsche Bank past and has an interesting interview with a high level staff (Bank president?) and found it curious to glimpse on how they think (or thought).

65 points by dsri 11y ago

Ignoring problems until they went away? Sounds like my IT department...

I love Matt Levine's articles. He's good at simply explaining the arcana of Wall Street. But when I read this article, I can only say one thing: Why? Why is Wall Street spending all this time and energy in creating all these different securities? I suspect that any excess "profits" or "returns" to be had from them accrue 90% to the bankers and 10% to the muppets funding them. So why do the muppets keep playing this game?

x3n0ph3n3 11y ago
Because muppets don't believe they are muppets.
- a3n 11y ago
  If you look around the table, and you can't find the muppet, ...
meric 11y ago
The muppets are fund managers who use other people's money to buy Wall Street securities. People have fund managers because of the law.
- kennethh 11y ago
  Muppets are usually pension funds, where the people doing the investing want to do it as easy as possible and with high rewards so they get the bonus for doing nothing.
mathattack 11y ago
People need to invest their money somewhere. In this case, the sucker would actually have been DB's investors if the worst case ever did happen. (They would have gone under like many other banks - the bailout saved them.) In this case the investors they sold protection to (hedge funds) got better prices than they ordinarily would have, because of the risk hidden in the conduit.
zzleeper 11y ago
To expand on the other replies, and based on experience: 1) The way you get to sell products to investors is by promising some sort of alpha: "My fund is less risky, my derivative pays more for the same risk, etc." 2) But magic does not happen in the financial markets (and when it does is through the old stories.. diversification, transferring the risk to those of broader shoulders, etc.) 3) So what you do is HIDE THE RISK. There are many ways to do that, and they usually involve COMPLEXITY. Complexity and opacity are your friends, as they confuse investors who don't realize there is a hidden risk somewhere there, or a scenario you haven't told them (but put on page 350) where if A B and C happen, then he will lose a lot of money. I'm not joking here.. sometimes complexity is good as it allows you to e.g. reduce mismatches in your risks (your income is in USD and expenses in EUR, your debts are long term and assets short term, etc.). However, the ultimate purpose of most complex products is that they allow you to sell stuff that appears better than it really is. And IT WORKS. Everytime. Against millionaires and against folks buying silly combos of insurances plus deposits (forgot their names).
- PhantomGremlin 11y ago
  > So what you do is HIDE THE RISK I've been rereading my copy of Taleb's Antifragile. He keeps hammering similar points over and over: complexity, risk, opacity, susceptibility to Black Swans, etc. I think I'd be depressed if I worked on Wall Street and the better part of my compensation resulted from peddling all these confusing products. Still, as you point out, sometimes complexity is good. I do understand that.
- mynegation 11y ago
  These combos are called "structured products"
- wpietri 11y ago
  And I would almost be ok with this if the complexity-generators understood all their complexity and were using it as a great trick to steal money from idiots. What really scares me is that a) even the complexity-generators can easily miss potential issues, and b) when you throw all this complexity together, nobody has any clue what's going on. And then we wrap it up all with a bow by allowing finance people to alternately claim that a) they are so smart they deserve to personally make millions to billions, and b) they couldn't possibly be held accountable for systemic fuckups, because nobody could possibly have known. I'll accept one or the other, but the combination is incredibly dangerous.
ddeck 11y ago
>Why is Wall Street spending all this time and energy in creating all these different securities? The primary purpose of these trades is to offload super senior risk from DB's balance sheet. Super senior risk is the risk that DB retained when it (very profitably) sold various other tranches on a group of assets (typically CDS on a bunch of corporate and sovereign credits). This type of risk is very difficult to sell as the return is very low and most entities they might buy unfunded protection from are likely to not be able to pay in the event that the swap pays out. Offloading that risk through a swap to a conduit like this allows DB to release (expensive) capital/reserves that would otherwise need to hold.
lmm 11y ago
It's a regulatory arbitrage. Everyone knows that the risk on those super-senior tranches is basically zero (it would take something like 60% of the world's investment-grade companies going bankrupt for them to actually pay off), but the regulations say that Deutsche would have to hold assets to cover it. So they find some investors who declare that they'll cover it instead, in exchange for a few percentage points, and everybody wins: the investors get (a small amount of) free money, Deutsche can hold fewer assets and use its balance sheet for more profitable things. Even the regulators probably don't mind so much - the regulations are overly simplistic (dare I say populist?) in circumstances like this, and everyone knows that.
- FeepingCreature 11y ago
  My programmer instinct here is - if the regulations have a problem, let profit fail to be made. Fail early, fail hard, then go fix it. Don't go off operating in an undefined state.
  - lmm 11y ago
    I think anyone who has programmed for a medium- or large-sized organization will be familiar with the experience of getting a stupid technical directive from above (e.g. "this part must be XML") and treating it as an obstruction to be worked around (while technically abiding by the letter of it). It's not an undefined state, it's just a case where the rule is unhelpful.
deleted 11y ago
[deleted]
pjc50 11y ago
The "muppets" are multi-billionaire asset holders. That money has to go somewhere and they want a return on it, or at least the promise of a return. Quite a lot of financial strangeness can be answered with "where else are you going to put your money?" Western treasury bonds are the safe option, but they're close to negative yields. Spending $1.01 at auction to buy a bond which nominally costs 95c and pays back $1 in five years doesn't look great. So there is a huge demand for "riskless" positive-yielding investments. That's why London (and elsewhere) property continues to shoot upwards in value way beyond the ability of the inhabitants to afford it. That's why Switzerland has negative interest rates. And so on.

Daneel_ 11y ago

Every time I think I know a little bit about economics, I read articles like this and realise I'm playing with wooden blocks while the big boys are playing with space shuttles. ...except they made the space shuttle out of wooden blocks, and they're just pretending really hard that it's going to work.

mathattack 11y ago
If you have a small group of brilliant computer scientists, they can create world changing software. How many folks were required to get Snapchat or Youtube off the ground? What happens when this level of genius in small groups is cut loose on financial markets where "Make money is the only goal"? You get these space shuttles. They are so complex because that's all these people ever think about.
- cm2187 11y ago
  The silicon valley is hardly a counter example of "make money is the only goal". In fact for those who question the compensation of bank executives, the compensation of silicon valley executives should raise a few eyebrows.
- adwn 11y ago
  > If you have a small group of brilliant computer scientists, they can create world changing software. How many folks were required to get Snapchat or Youtube off the ground? Snapchat is world changing and the work of brilliant computer scientists? Did I miss something? I can only hope that your post was intended to be sarcasm.
  - ccvannorman 11y ago
    I think the meaning is "It only takes a small high powered team to 'change the world'/add tremendous value if they have skills and a good idea." Snapchat is one example of many.
- pjc50 11y ago
  Youtube owes just as much of its success to an army of lawyers achieving two things: filling up with copyright content without getting sued and/or jailed, and banging codec licensor and standards body heads together until video worked everywhere without wildly unreasonable cost or transcoding for every device.

th3iedkid 11y ago

Long time back i was studying Asset Backed Commercial Papers (ABCP) as a special purpose vehicle conduit and its effects on market runs during the financial crisis. For those who want to understand it , these might possibly help(These are only personal notes.): [part 1]https://medium.com/finance-and-economics-studies/read-note-on-asset-backed-securitization-special-purpose-vehicles-and-other-securitization-issues-a715f980bb1c?source=latest https://medium.com/finance-and-economics-studies/read-note-o... [part 2]https://medium.com/finance-and-economics-studies/asset-backed-securitization-special-purpose-vehicles-and-other-securitization-issues-98e7ad3231f9 https://medium.com/finance-and-economics-studies/asset-backe...

Aloha 11y ago

I hate to use a redditism here, but could someone ELI5 this for me? I got lost somewhere around the first appearance of the word tranch,

ianpurton 11y ago
In the financial markets you can buy insurance such that if a company fails e.g. Microsoft, you get a payout. It's called a credit default swap. Deutsche bank sold lot's of this type of insurance. If the markets had turned and some large companies had gone bankrupt they would not have had the means to pay the people who bought this insurance. Basically they took very low quality insurance and re-packaged it as high quality insuarance.
- Zigurd 11y ago
  Excellent explanation. CDSs are insurance. So why can't you buy the equivalent product from an insurer, labelled and regulated as insurance? Because the capital requirements under insurance regulation would have been prohibitive. So why weren't the banks charged with illegally selling insurance products and/or violating insurance regulations? Because fuck you, peon.
ddeck 11y ago
Let me try: Imagine an empty company loans 100 companies $1 each. To get the $100 to loan, that company sells bonds to 2 investors for $50 each. One investor is senior and one is junior. What this means is that if any of those 100 companies default and don't pay back their loan, then the junior investor loses money. The junior investor loses money until their entire $50 is lost, and only then does the senior investor have to suffer loses. The senior investor therefore only has losses if more than $50 of the total $100 loans is lost. This is basic credit tranching in funded format. Unfortunately things get a lot more complicated when instead of $1 loans, we have $1 credit default swaps, which instead of loaning someone $1, you promise to pay them if a 3rd party company defaults. This trade is DB buying protection from a company on a very senior tranche of this type of trade, but they are buying it leveraged, so for example they buy $100 of protection from a company that has $10 of cash inside (provided by the third-party investors), with a promise to pay more if the tranche deteriorates. As far as rationale, the primary purpose of these trades is to offload super senior risk from DB's balance sheet, which they accrued through doing a different type of trade.

randomname2 11y ago

Deutsche Bank is hardly a bank in the traditional sense considering their balance sheet. With $72.8 trillion euro in derivative exposure (the largest in the world, 21x the GDP of Germany) this will have to blow up in a spectacular fashion once one of these counterparties fail: http://imgur.com/MNECKC4.jpg http://imgur.com/MNECKC4.jpg A former Kansas Fed president called them "horribly undercapitalized", with a leverage ratio of 1.63 percent: http://www.reuters.com/article/2013/06/14/us-financial-regulation-deutsche-idUSBRE95D0X620130614 http://www.reuters.com/article/2013/06/14/us-financial-regul...

cm2187 11y ago
The notional amount doesn't tell you anything meaningful in term of risk. Say I am Deutsche, you are Citi. I trade a €1bn 10 year interest rate swap with you and then another €1bn 10 year interest rate swap with you in the opposite direction. The risk is exactly zero (the two transactions will be netted to zero in case of an insolvency) and the cash flows will perfectly offset each others. We each have €2bn of notional of derivatives outstanding. Banks like Deutsche aren't in the business of taking large directional derivative bets. They are market makers so the quasi totality of these 72 trillions are offsetting positions, which are mostly collateralised, i.e. each counterparty has to post assets to match the evolution of the value of the derivative in order to keep the credit exposure minimal. With such a massive book, there will be residual risks all over the place but 72 trillion is a meaningless number for assessing them.
- retube 11y ago
  Absolutely correct. Notional is an absolutely meaningless figure. If anything it is comparable to the total notional of derivatives ever traded: contracts are rarely torn up (1), more usually offsetting derivatives are entered into in order to cut the exposure. And anyway notional tells you nothing about the risk or exposure. 1bn of 30y is a lot riskier than a 1bn of 1y etc. 1 - End customer trades do sometimes get torn up. Also trade compression services between street counterparts also result in bulk tear-ups from time to time. But still the vast majority of trades are legacy and largely offset each other.
- 11y ago

webtards 11y ago

The money moves around and around and around (notionally) a dizzyingly large number of times because the more opaque the process and end product, the less immediate introspection it receives, the less well the average Joe can understand it, and the firm can continue 'alchemy'. Kudos to the regulators for the arduous task of unravelling the large ball of string and following it to the conclusion!

wpietri 11y ago
It reminds me a lot of large code bases. At some point people face a choice between a) forcing sufficient simplicity and clarity that one has a chance of understanding what's going on, and b) saying "fuck it" and letting complexity metastasize to the point nobody really understands what's going on. The difference, of course, is that with software the opaqueness is pure cost. Whereas in the financial markets the opaqueness is often a profitable resource from somebody.

dunkelheit 11y ago

The insurance in question would only pay off under some very improbable and dire circumstances. And under these circumstances the chances of getting a payoff are rather slim because, you know, the world is crashing and burning. Some time during the crisis the risk became very real which was reflected in the market prices of credit protections. But DB and "investors" continued to act as if the risk was small. What I don't get is who paid for that risk in the end. I suspect it was the government which bailed everyone out with public money so that the doomsday scenario was never realized.

zemanel 11y ago

Off topic but this reminded me of a movie i saw last year, "Blackbox BRD" (http://en.m.wikipedia.org/wiki/Black_Box_BRD http://en.m.wikipedia.org/wiki/Black_Box_BRD) which relates to Deutsche Bank past and has an interesting interview with a high level staff (Bank president?) and found it curious to glimpse on how they think (or thought).