The FT reports:
The US justice department has sued Deutsche Bank for more than $1bn, accusing the German lender and a subsidiary of lying their way into a government mortgage scheme and “recklessly” endorsing risky loans for federal insurance.
“These companies repeatedly and brazenly breached the public trust,” Preet Bharara, US Attorney in New York, said Tuesday during a press conference.
Suing bankers for breaching public trust?
"Whatever next?" will be their defence.
As far as they're aware that's what they're for.
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These are civil charges, which means the government’s case is relatively weak.
This will be settled. The only parameters are the amount of the settlement (c $500 million would be my guess), and whether Deutsche admits any wrong wroindoing (very unlikely, will admit “lapse in overight”, no more). It will also be interesting to see whether similar claims are brought against other banks. Deutsche is a small actor in US mortgages; the DoJ is surely more interested in BoA or Wells Fargo (post-Wachovia).
D
Yes, I too always pay up $500 million when I’ve done nothing wrong
Of course, anyone else would too
Silly of me not to realise that when I commented
With all due respect, you are not a global coporation with a market capitalisation in excess of $30 billion. You would not have to worry about the cost of protracted civil litigation, the distraction to your business lines and the impact on your reputation. $500 million will hurt, but it is the least worst outcome.
The claim has some similarities with the SEC’s charges against Goldman Sachs in the Abacus/Paulson case. It was also a civil case where it turns out the SEC was playing a realtively poor hand. Goldman settled (for $550 million), admitted no wrongdoing but just said some of the disclosure it put out could in hindsight have been better, and threw a few employees under the bus for good measure. The $550 million certainly hurt, but it ended up being a rounding error on quarterly EPS.
Politics, you know, is never pretty.
D
Then clearly they should sue for $5 billion
I am curious as to why?