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How Deutsche Bank Made a $462M Loss Disappear

bloomberg.com

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Re: How Deutsche Bank Made a $462M Loss Disappear

#41

Post by traviscj »

bradleyjg wrote: post #23
bogomipz wrote: post #9

Earlier quoted context omitted.

Wow I was downvoted for saying that management needs to be held accountable for criminality? The cycle repeats because there is no disincentive to stop it. How many people went to jail after the 2008 crisis? I think you could count them on one hand and still not use all you fingers. Nobody will go to jail for Wells Fargo fraud either.

Downvotes happen. Maybe someone fat fingered. Maybe someone doesn't like you because of a different post. No point in dwelling on it, and in any event often enough it swings back later.

Gotta give everyone their fresh, daily dose of self doubt.

Re: How Deutsche Bank Made a $462M Loss Disappear

#42

Post by yourapostasy »

munificent wrote: post #34
mkesper wrote: post #17

Earlier quoted context omitted.

Like "self-employed" package deliverers. Many of them only can get their workload done by constantly breaking speed limits.

This is the unspoken foundation of the "sharing economy". You get a big pool of individual actors to make exchanges with each other in a marketplace like the ones provided by Uber, TaskRabbit, etc. The market takes its little cut of every transaction, but takes zero percent of the risk. That's all passed on to the individual participants. Car break down? Not Uber's fault. Get hit by a drunk driver? Lyft don't care. H…

The core of the challenge is our measuring stick --- money --- is a too-aggressively lossy transaction representation system, yet it is press-ganged into use as such when it really should only ever represent just the money itself instead of all the imputed characteristics ascribed to it by current mainstream economic thought. All sorts of desirable information by involved parties is detached from the money when the transaction completes, and we currently have very incomplete mechanisms and highly fragmented platforms for conveying that information.

Taking this down to a more concrete level, if every transaction and popular properties in a market were recorded and undoxx-ably published blockchain-style, then market actors who try to externalize costs will find those properties they are externalizing upon others added to the system, and their activity shunned more quickly. Much rent-seeking and externalizing behavior today in businesses (especially gig economy-pitch-based businesses) relies upon a great deal of extreme asymmetric information postures between the parties, possible because of the much more complex information ecosystem we operate in as economic actors today.

Re: How Deutsche Bank Made a $462M Loss Disappear

#43

Post by badminton1 »

otoburb wrote: post #11
btilly wrote: post #6

There is a subtle historical irony on this deal happening with an Italian bank. Italian banking, including the bank in question, got its start back in the middle ages by getting around prohibitions on usury with similar "guaranteed to lose" bets on currencies. The bank would give the borrower money in one currency now, and the borrower would give the bank back a different sum of money in another currency in 6 months.…

The song "Everything Old Is New Again" by Peter Allen & Carole Bayer Sager from the 1974 album Continental American seems apt.

Like Admiral Yi Sun-sin and the turtle ships.

Re: How Deutsche Bank Made a $462M Loss Disappear

#46

Post by valentt »

So this one investigation managed to neutralise all people at Deutsche Bank that were doing same things that most other banks are also doing - making highly risky semi legal investments and reaping profits. So now without those kind of people in Deutsche Bank the have no way of competing on global markets and will loose money while other bankers reap the benefits. Nicel done. Congrats to American bankers.

Re: How Deutsche Bank Made a $462M Loss Disappear

#47

Post by maus42 »

bogomipz wrote: post #9
mikeash wrote: post #5

Earlier quoted context omitted.

Companies don't want to police their own departments. This is how lots of modern companies deal with laws they don't like. They commit to obeying the law, tell everybody not to do anything illegal, but at the same time place requirements and expectations on the peons that force them to break the law. Then the peons get caught, they tell everybody how it's not their fault, they told everyone not to do that. The peons…

Wow I was downvoted for saying that management needs to be held accountable for criminality? The cycle repeats because there is no disincentive to stop it. How many people went to jail after the 2008 crisis? I think you could count them on one hand and still not use all you fingers. Nobody will go to jail for Wells Fargo fraud either.

> Nobody will go to jail for Wells Fargo fraud either.

True. Also remember many people who tried to bowl a whistle on the fraud can't now get employed in the banking because Wells Fargo blacklisted them...

Re: How Deutsche Bank Made a $462M Loss Disappear

#48

Post by simsimcentury »

abandonliberty wrote: post #22
nickff wrote: post #15

Earlier quoted context omitted.

The laws have gotten increasingly vague, and enforcement increasingly discretionary, so you never know which rule (if any) will be applied to what action. As such, no one can guarantee that any action is 'legal', so the risk team will always say there is a 1-10% chance of being fined/prosecuted. These enforcement actions have become an unavoidable cost of doing business.

>These enforcement actions have become an unavoidable cost of doing business. I don't know if we realize the gravity of that statement. The current environment rewards companies who take these sorts of actions. A bank that did not take these actions would be out-competed.

I lead a department at a medium sized global business. I recently approached our internal counsel and external specialists about day to day legal issues my team encounters. I wanted to know: Can, Can't, Should, Shouldn't. All I got was a statistical probability of getting in trouble and a summary that stated do whatever, the chances of getting caught and the chances of that even mattering are nil. Better off doing what makes you most effective, even if that entails breaking the law.

When you look at it clinically it makes sense. Quite the slippery slope.

Re: How Deutsche Bank Made a $462M Loss Disappear

#49

Post by rtpg »

I'm having a hard time understanding why they could not execute this as a simple loan? Would that not have gotten around the requirements?

My reading here is that the base mechanism of the trade was "DB gives X, receives Y% of X over Z years".

I really wonder what % of transactions are this sort of fee-generating trade

Re: How Deutsche Bank Made a $462M Loss Disappear

#50

Post by johnchristopher »

yourapostasy wrote: post #42
munificent wrote: post #34

Earlier quoted context omitted.

This is the unspoken foundation of the "sharing economy". You get a big pool of individual actors to make exchanges with each other in a marketplace like the ones provided by Uber, TaskRabbit, etc. The market takes its little cut of every transaction, but takes zero percent of the risk. That's all passed on to the individual participants. Car break down? Not Uber's fault. Get hit by a drunk driver? Lyft don't care. H…

The core of the challenge is our measuring stick --- money --- is a too-aggressively lossy transaction representation system, yet it is press-ganged into use as such when it really should only ever represent just the money itself instead of all the imputed characteristics ascribed to it by current mainstream economic thought. All sorts of desirable information by involved parties is detached from the money when the t…

Trading is an information war where the only edge you can get is through asymmetric information about the deals and the products/services (violence being a special case). I wonder what trade would look like with a complete transparent process.
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