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US slams Deutsche Bank for financial crisis role

The Local · 15 Apr 2011, 11:47

Published: 15 Apr 2011 11:47 GMT+02:00

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The US Senate Permanent Subcommittee on Investigations this week said the bank had wittingly pushed high-risk assets known as collateralized debt obligations (CDO) that would help cause the United States’ worst economic collapse since the Great Depression.

“Our investigation found a financial snake pit rife with greed, conflicts of interest and wrongdoing,” said Sen. Carl Levin while presenting the 639-page report.

US officials documented how Germany’s largest bank assembled a $1.1 billion CDO fund known as Gemstone 7, then filled it with low-quality assets that its top CDO trader referred to as “crap” and “pigs” that needed to be sold “before the market falls off a cliff.”

“Deutsche Bank lost $4.5 billion when the mortgage market collapsed, but would have lost even more if it had not cut its losses by selling CDOs like Gemstone,” the Senate committee’s report said.

The committee also singled out US investment bank Goldman Sachs for helping perpetuate dealings leading to the unprecedented financial meltdown in 2008.

“Both Goldman Sachs and Deutsche Bank underwrote securities using loans from subprime lenders known for issuing high risk, poor quality mortgages, and sold risky securities to investors across the United States and around the world. They also enabled the lenders to acquire new funds to originate still more high risk, poor quality loans,” the report found.

Deutsche Bank said in a statement it had “significant losses” from its risky behaviour and therefore had not willingly misled investors.

Story continues below…

“As the report correctly establishes, there were differing views about the US property market within the bank,” Deutsche Bank said. “These views, however, were completely conveyed to the (financial) markets.”

The Local/DPA/mry

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The Local (news@thelocal.de)

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Your comments about this article

15:13 April 15, 2011 by catjones
Toothpaste companies claim your teeth will be whiter; Bio companies claim their carrots are fresher and Banks claim higher returns. Everybody's selling something; sometimes they even call it the news.
15:36 April 15, 2011 by derExDeutsche
you're joking right, the Local?

Michigan Sen Carl Levin (D)? hahahahaha. From Detroit? HAHAHAHA. is theLocal aware that Michigan is one of the worst managed, and most BROKE States in the USA. Average home cost in Detroit is under $30,000. Michigan is know for a few things; Unions, crime, bankruptcy, corruption and an industry that moved elsewhere due to cost of doing business in Michigan. Let me guess.... all that is Deutsche Banks fault, as well.
23:37 April 15, 2011 by wxman
This too will pass, Germany. We plan to get rid of our "problem" in November 2012.
00:39 April 17, 2011 by srjmsbnd
Years ago when I was one of only 5,000,000 US and maybe 10,000,000 internet users worldwide I thought we were doing something enlightening and progressive now everyone gets online, that for the most part in response to the intelligent article written the author, he is rewarded for the most part by disrespect from

ignorant empty rhetoric and ungracious idiots. Now some may not knowing me my attempt gaslight tricks with me referring to what I say as if they can say the same.

I don't think so. American and the western have been very complacent and foolish resting on their laurels and past accomplishments while all along sliding into an abyss of their own creating for which conservatives, liberals and nationalism provide no solution.

Yes Goldman Sachs was crooked and the Banking Industry was foolish and they should (MUST) all be criminally and civilly held accountable for their crimes and indiscretions from what they did in Ireland, and conspired to in Iceland, Greece, Italy Spain, England and YES GERMANY, Holland, the UK France and all the g20 governments.

Germany as a senior economic partner is especially responsible and the corrupt practices of the demagogue Merell administration are not excepted. Chancellor Angela Merkel is a deceitful underhanded politician who I personally feel comes from a family of western, eastern and Russian spies and informers who has no ethics and morals in abrogated any obligation to the truth.
15:03 April 17, 2011 by Eastard
As a US citizen, I read the LOCAL mostly for the quality comments to articles... Compared to the US, LOCAL readers are more likely to add useful responses with either new information or different perspective. This feature may be in the decline... I can assure you that no powerful country is perfect... no elected official is able to please everyone... and ALL corporations are inherently corrupt when it comes to making profit... and we all know it.. If Germany does not want Merkel how about a swap for Obama...? We'll even thrown in Biden...
13:22 April 18, 2011 by catjones
@Eastard...you forgot a generalization...people like you have ALL the answers.
10:50 April 21, 2011 by Universalismus
The U.S. govt thru the Treasury and Free-market Scissorhand that thru the Fed Reserve then screwed lending banks, investors, lenders, borrowers, small business owners, homeowners, communities, and have collateralized the next 5 to 8 generations to make up for it. The whole enchilada..

Deutsche Bank just didnt wanna get spiced up on that whole enchilada so, it threw the stinky meal back to the U.S. and deemed screw these worthless securities.

Thats Deutsche... deep and rooted. Not necessarily Deutsche Bank


Sen. Carl Levin, if you get on top of the Capitol, aim your rifles and guns on straight under you, yes there..instead of aiming east of the Atlantic. You see, that's where it all started. Aim those glorious recipies of revenge of yours, into gutting investigative reports of the still-in-effect manufactured plan and in your face American Armed Robbery being perpetrated now to everyone poor and rich. Aim there!! yes.. and pull the trigger hard.

Who? Treasury Secretary current and former, Bail-out scaremongers, Investors and high-income bracket tax-exempt couch potatoes that are right under your guns. Dig even further you may find more to hold accountable.

However please don't say it was Deutsche Bank or Europe that created the worst economic collapse or I'll throw a shoe at your face, really... the stinky one that George Bush didn't get before he left office.

Senator: don't act as if we think you're clueless or emptyminded

Come live in Europe for a few weeks, we'll educate you:

snake pit rife with greed,

conflicts of interest

and wrongdoing

You'll go return to D.C. thankful

with tremendous shaking force

we may even get sued

for giving you a Ph.D.

...a good old Permanent head Damage
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