# Deutsche Bank headlines



## TomB19 (Sep 24, 2015)

I'm following what I can about Deutsche Bank.

I've noticed quite a few articles refer to the DOJ fines being due to "missteps".

Here's one but a google search will bring up many.

http://fortune.com/2016/10/27/deutsche-bank-earnings-fine/

How is it that criminal activity can be referred to as "missteps"? They inadvertently sold some low grade garbage as bars of gold and it's a "misstep".

If I sold a box with some knobs as a world class stereo, I'd be thrown in jail. Well... unless I was a large bank.

Why are news sources using pacifying language with regard to this crime? Any insight?


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## sags (May 15, 2010)

Jamie Dimon, CEO of JP Morgan smirked at Senator Elizabeth Warren and said....."so fine us. We can afford it".

That pretty much sums it up.


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## mordko (Jan 23, 2016)

Responsibility for their stupidity is diluted. Nor was it an obvious fraud like with the stereo example. 

First the government forced mortgage companies and insurers to service borrowers who could never repay. Then the financial industry pulled all these mortgages, mixed them up and called them a "diversified product". Rating agencies assigned AAA rating because it was diversified. They bet there won't be too much stink if there is a piece of **** in a pile of hay. The trouble was that the whole thing was ****. Then DB sold the products without realizing it was crap. A bunch of people engaged in self-deception but it wasn't fraud.


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## james4beach (Nov 15, 2012)

The bigger problem with Deutsche Bank is that they are on the brink of failure and collapse. They are perceived to be too big to fail, and everyone currently assumes that the German government will bail them out.

This is a bad situation. With the crashing European economy, Germany can't really afford to take on all those liabilities. It will hit the country very hard. And of course if they let the bank fail without assistance, it will also hit Europe very hard.

The ECB might try some version of the American sleight of hand, where they have the central bank prop up the bank by purchasing all kinds of assets from them and extending them limitless loans. This seemed to "work well" in the US & Canada. It worked so well that most Canadians aren't even aware that the Big Five banks were on the brink of collapse and only survived due to emergency loans from the Federal Reserve and Bank of Canada.

My guess is that Europe will attempt a similar bank bailout strategy to what the Federal Reserve did. Taking the route of secret, undisclosed loans seemed to have the least fallout.

Deutsche Bank is one of the derivative giants of the world, meaning it has many counterparties around the world. There will be a very significant global impact when Deutsche Bank fails, whether or not it's bailed out. The equity will be wiped out and DB will become worthless.


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## mordko (Jan 23, 2016)

On the other hand Germany is afraid that if they rescue Deutsche, all Italian and French banks that near bankruptcy will flout the rules as well. That would destroy the eurozone too.


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## james4beach (Nov 15, 2012)

Yes Germany really is in a pickle. This is a no-win scenario for them. And how will the Greeks and other countries react when, after denying to bail out Greece, they bail out banksters?

It shows the benefit of autonomy, like in US, Canada, Japan, China, etc. These countries can unapologetically bail out their banks and destroy their currencies.


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## Rusty O'Toole (Feb 1, 2012)

They have been playing fast and loose so long they think it's normal. Call it entitlement. Or call it 'too big to fail'. If you have the pull there is no limit to the crooked deals you can pull and get away with it. If you don't believe me, how many bankers went to jail after the mortgage fiasco of 2007? None. How many wen to jail after the S&L fiasco in 1986? More than 1000. What changed? What about when they got caught colluding to fix the price of gold, or interbank interest rates?

You should also know European banks are typically leveraged 30 or 40 times. In other words their reserves are less than 3% of their liabilities. That means, a paper loss of 4% and they are bankrupt. That is why they were shitting themselves when the Greek bonds were tanking and why the IMF had to bail them out. They weren't bailing out Greece, they were bailing out the banks. The Greeks got stuck with the bill while the money went to pay the back interest.

They will not be allowed to fail. They will be bailed out somehow and the world economy will take on a little more water. How long they can keep dodging reality before the whole thing sinks, I don't know. I'm astonished they have avoided facing the music this long.


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## james4beach (Nov 15, 2012)

Canadian banks are just as highly leveraged, about 30 times. The difference is that our economy isn't crumbling.

For those who don't believe me about the leverage, this is based on apples-to-apples with Europe using new Basel III guidelines. Look at the CET1 (Common Equity Tier 1) capital numbers. The Basel III guidelines standardized this strict measure of *tangible equity* which did not exist before the financial crisis.

Based on Basel III, the Canadian banks' ratio of (Assets / CET1) is 27. This is about the same amount of leverage that American banks had before their crisis, again when using a strict definition of tangible equity and not the much looser capital definitions that regulators allow.


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## Rusty O'Toole (Feb 1, 2012)

If the Canadian banks get in trouble they can help themselves to YOUR money if you have a bank account. It is called a bail in and it was approved in the 2013 budget. But don't worry they won't do it unless they really need the money.


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## james4beach (Nov 15, 2012)

Rusty, to clarify though: insured deposits are safe. It is absolutely important to ensure that all of your bank deposit have CDIC guarantees, or FDIC in the US and don't exceed the limits.

Remember for example that US$ deposits in Canadian banks are not covered by CDIC.


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## new dog (Jun 21, 2016)

Very good points by James and Mordko here. Deutsche bank bailout will be backdoor mostly as James suggests and there will be an extension of this to the banks Mordko mentioned as they continue to go all in. I am sure work has already been done to this point or we would probably be in the end game right now.


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## sags (May 15, 2010)

What happens when you deregulate and remove oversight and rules ?..........taxpayer bailouts.


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## Rusty O'Toole (Feb 1, 2012)

james4beach said:


> Rusty, to clarify though: insured deposits are safe. It is absolutely important to ensure that all of your bank deposit have CDIC guarantees, or FDIC in the US and don't exceed the limits.
> 
> Remember for example that US$ deposits in Canadian banks are not covered by CDIC.


What does that mean for my TD US dollar Think or Swim account?


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## james4beach (Nov 15, 2012)

Rusty O'Toole said:


> What does that mean for my TD US dollar Think or Swim account?


I don't know. But as that's under the brokerage arm, it doesn't qualify for the government deposit insurance. Assets are likely insured under CIPF (the brokerage insurance) but you really should contact and ask them to be sure. If it's covered under CIPF, then cash amounts in all currencies are covered -- both CAD and USD.

Here's how they stack up

*Bank deposit insurance, CDIC*
- only CAD is covered, and deposits up to 5 year terms
- traditional bank deposits (chequing, savings, GICs)
- strongest insurance as it's backed by federal govt

*Brokerage insurance, CIPF*
- brokerage accounts
- cash in all currencies are covered
- non-government insurance with no govt guarantee
- can sometimes take a long time to receive payouts


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## lonewolf :) (Sep 13, 2016)

The thinking of the masses can effect the thinking of even the most advanced of intellect. To much faith in government around the world can be seen by negative yielding government bonds. The common thinking is if the government backs it is safe. I think the herd is wrong on this one.


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## james4beach (Nov 15, 2012)

james4beach said:


> The bigger problem with Deutsche Bank is that they are on the brink of failure and collapse. They are perceived to be too big to fail, and everyone currently assumes that the German government will bail them out.
> 
> This is a bad situation. With the crashing European economy, Germany can't really afford to take on all those liabilities. It will hit the country very hard. And of course if they let the bank fail without assistance, it will also hit Europe very hard.
> 
> ...


I still believe this, by the way. The equity price has continued to fall over the years, down nearly 8% today. I still believe DB equity will be wiped out.


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## james4beach (Nov 15, 2012)

DB is now saying the bank will have a huge restructuring. At the same time the CEO assures shareholders that they will not be wiped out by dilution (equity issuance) which feels like a far fetched claim to me.
https://ca.finance.yahoo.com/news/deutsche-bank-vows-avoid-capital-093412714.html

DB has been low on capital and has issued tons of equity over the last years, about $33 billion. This has pounded the share price down.


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## Longtimeago (Aug 8, 2018)

TomB19, clicking on your link led to a spam site coming up that purported to be from Google telling me that I had been selected as a 'lucky winner'. Very convincing looking page until I took a closer look. 

Others be warned.


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