US slams Deutsche Bank for financial crisis role

Almost three years after the global financial crisis, Germany’s Deutsche Bank has been slammed in a US Senate report for allegedly recklessly pushing worthless mortgage-backed securities to investors.

US slams Deutsche Bank for financial crisis role
Photo: DPA

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.

“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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Emergency numbers fail in several German states

Callers to the emergency numbers 110 and 112 weren’t able to reach operators Thursday morning in several German states.

The 112 emergency number on an ambulance.
The 112 emergency number on an ambulance. Photo: picture alliance/dpa | Boris Roessler

The emergency number 110 for police and 112 for fire crews failed around the country early Thursday morning, with callers unable to reach emergency operators for urgent assistance between about 4:30 am and 5:40 am local time.

The Office for Civil Protection and Disaster Aid is looking into these outages, which were reported in states including Lower Saxony, Baden-Württemberg, and  Brandenburg, and in major cities like Berlin, Cologne, Hamburg, and Frankfurt. Cologne was further affected by cuts to electricity, drinking water, and regular telephone services. Lower Saxony also saw disruptions to the internal phone networks of police and hospitals.

Emergency services are not reporting any more disturbances and people should be able to once again reach 110 and 112 around the country as normal.

Investigators are looking into the problem, but haven’t yet established a cause or any consequences that may have happened due to the outage. Provider Deutsche Telekom says they have ruled out the possibility of an attack by hackers.