How Deutsche Bank Made a $462M Loss Disappear • Hacker News Board

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

#51

Post by S4M » Sat, Jan 21, 2017, 5:23 PM UTC

rtpg wrote: post #49

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

I suppose that with a loan it would be transparent that the money "gained" would have to be repaid later, while in the case of a sure to lose bet, the price of the derivatives could have been tweaked so it would be apparent only later that the money would be lost.

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

#52

Post by drakonandor » Sat, Jan 21, 2017, 7:38 PM UTC

simsimcentury wrote: post #48

abandonliberty wrote: post #22

Earlier quoted context omitted.

>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 wh…

Everyone does the same thing in their personal lives.

"% chance of getting in trouble if I punch this asshole in the face?"

"% chance of getting a speeding ticket if I go 15 above?"

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

#53

Post by eru » Sat, Jan 21, 2017, 11:54 PM UTC

D-Coder wrote: post #37

eru wrote: post #21

Earlier quoted context omitted.

You could incentivise more people to audit their banks by eliminating deposit insurance.

Been there done that bought the Great Depression.

The US deposit insurance via FDIC was created close to the start of the Great Depression and did _not_ prevent the rest of it.

For something that did stabilize economies, see eg the Canadian free banking experience in the 19th century (https://www.alt-m.org/2015/08/08/thats-right-famously-sound-...), or the Scottish or Australian free banking eras.

What made the depression Great were eg FDR's high wage policies, and the American Feds tight money.

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

#54

Post by FabHK » Sun, Jan 22, 2017, 1:31 PM UTC

rtpg wrote: post #49

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

A loan doesn't change your profit for accounting purposes - you gain $$$ in cash (asset), but have the same $$$ as a loan (liability) on the other side of the balance sheet.

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

#55

Post by prirun » Mon, Jan 23, 2017, 8:06 PM UTC

Whatever happened to the "Greece crisis"? Deutsche was one of the banks on the hook for that mess, and now you hear nothing about it. Did little ole Greece have billions of dollars in a dusty treasure chest somewhere? All this financial crap is a scam...