This Financial Times piece about Deutsche Bank — “The Day Deutsche Bank’s Boss Decided on a Radical Solution” — from a bit more than a week ago was a trip. It’s about CEO Christian Sewing’s recognition that the music had stopped under increasingly tawdry circumstances (police raids looking for evidence of money laundering aren’t nice, and earnings had been falling…) “[emboldening him] … to call time on a two-decade attempt to conquer Wall Street.”
Invoking schadenfreude for DB is cliche at this point: a quick search finds three references in headlines, and many more textual references in the substance of articles, commentary, and blog posts. But … come on. How much blame does Deutsche share for the current US president? How about the subprime mortgage crisis? And what about those backdoor bailouts funded by peripheral EMU governments in the context of the Eurozone Crisis? I could be here all week, folks, and I’m barely touching the role this bank (and the other large private ones) played in the indirect hit job on German Landesbanks, the rise of securitization and globalization of finance, and the decline in boring lending by the largest pillars of German finance, exposing German finance and the economy to billions of risky assets that did not fare well after 2007.
This story is something else though! We are set up to pity Christian Sewing for making these tough decisions in the wake of the failed (and maligned) merger with Commerzbank, the bank employees set adrift by Sewing’s decision to unwind, and board members’ annoyance with shareholders’ anger at the meeting revealing all of this information to them, despite the bank’s having provided sausages and potato salad for the meeting.
“‘It would have been nice if the markets had applauded,’ admits one supervisory board member. ‘But Deutsche remains a ‘show-me’ case.'”
Is there a German word for chutzpah?
Other sources, if interested:
“Deutsche Bank Signs $7.2 billion Deal with US over Risky Mortgages“
“Deutsche Bank Mortgage Settlement Steers Away from Helping Distressed Homeowners“
“Deutsche Bank Faces Criminal Investigation for Potential Money Laundering Lapses“
Clement Bank: “Frankfurt’s Double Standard” — Cambridge Review of International Affairs — 2018
Emiliano Grossman: “Bringing politics back in: rethinking the role of economic interest groups in European integration” — Journal of European Public Policy — 2004
Daniel Seikel: “How the EC Deepened Financial Market Integration: The Battle over the Liberalization of Public Banks in Germany” — Journal of European Public Policy, 2013