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"We Can't Even Afford An $8 Billion Fine Let Alone A $14 Billion One" Deutsche Bank's Best Leverage In DOJ Negotiations

Because, y'know, it's true.
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By Nordenfan (Own work) [CC BY-SA 4.0], via Wikimedia Commons

via Wikimedia Commons

Deutsche Bank knows a thing or two about having blood on its hands, and it has a message for the Justice Department. While funding a little construction project in occupied Poland may seem like the right—and certainly profitable—thing to do at the time, in the long run it’s really not worth it.

So, sure, the Germans have played it a little fast and loose with just about every single rule they could, and then dragged their heels a bit on fixing things. Sure, Loretta Lynch might want to make an example of the one of the worst offenders on Wall Street. Sure, it might feel good to finally give one of the big banks the penalty it deserves.

But here’s the thing, Attorney General: Deutsche Bank doesn’t have $14 billion. Hell, it’s hardly worth $14 billion. So, sure, you can ask for $14 billion. But you’ll never get it, because such a fine is one of the literally hundreds of things that would kill Deutsche Bank. And you wouldn’t want to have that on your conscience, would you? You’ve always been reasonable in the past.

Like its peers, the German bank may be able to haggle with United States authorities. Citigroup paid $7 billion to settle a host of mortgage-related charges, though the Justice Department had first sought $12 billion, according to Reuters….

A fine of much more than $7.5 billion would push Deutsche Bank’s Tier 1 capital ratio below the psychologically important threshold of 10 percent, on Reuters Breakingviews calculations. That could raise market alarm given that the International Monetary Fund has reckoned Deutsche Bank is the world’s most systemically risky bank.

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