Deutsche Bank refuses to pay $14bn US penalty

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“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts,”Deutsche Bank said in a statement on Friday.

The Wall Street Journal reported the DoJ is demanding $14 billion in compensation to settle a set of high-profile mortgage-securities probes stemming from the financial crisis.

The bank’s spokesman confirmed in July settlement negotiations were underway, but the size of the potential penalty was unknown before today.

The amount is almost equal to Deutsche’s market cap. As a result, the share price of the German bank plummeted over eight percent on Friday, dragging the country’s stock market half a percent lower. Friday’s slump added to the 45 percent drop in the bank’s stock since January and a 53 percent slump over the last twelve months.

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Bank of America paid $17 billion to settle a similar probe in 2014. Goldman Sachs agreed to reimburse $5.1 billion earlier this year over troubles with mortgage-backed securities that were sold to investors as high-quality debt.

In 2014, the DoJ demanded Citigroup pay $12 billion for selling low-grade mortgage-backed securities, but the fine was cut to $7 billion.

Barclays, Credit Suisse Group, UBS and Royal Bank of Scotland face similar investigations and could also be penalized by US authorities.


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5 COMMENTS

    • I read something about that a while back. It’s my understanding that Germany claims to have deposited 1,500 metric tons of gold into the federal reserve and that fairly recently, they tried to retrieve 674 tons of that gold. The Fed told Germany it couldn’t be done and they denied Germany’s request to do an audit to make sure their gold was still there. Eventually the Fed agreed to send 674 tons of Germany’s gold back by the year 2020, but after the return of just five tons, the repatriation process stopped. The Fed claimed that hurricane Sandy flooded the floor that held German gold and that their gold was badly damaged by salt water. They also suggested that some got washed away. The fed claimed they would have to melt and re-pour the gold to determine how much was left after the hurricane. They estimated that 5 tonnes is what remained after loss and damage. 1500 tons, to 5 tons. Apparently Germany’s insurance didn’t cover flood damage. So,Janet Yellin came up with a solution where the Fed would provide Germany with federal reserve bonds equivalent to the dollar amount of their 1,500 tonnes of gold. How convenient for the fed, they just traded worthless paper for 1,500 metric tonnes of gold!

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