Deutsche Bank fined US$ 7.2 billion by US .
This is for their part in the mortgages backed securities scandal dating back ten years and Deutsche Bank is one of several top financial institutions that jumped on board the chance to make a killing. Although this is a huge amount, it is good news for this global player in international banking, as the start figure the US was going to levy was over US 14 billion. With little time left in the Obama administration, there has been a rush to put these cases to bed. Credit Suisse has also just settled at just over US 5 billion and our Barclays will be up before the judge shortly. These amounts are very significant but usually involves an actual cash fine of less than half the overall amount, the rest being given in the form of relief to existing and new borrowers over some years.
When house and land prices collapses in the US, pre recession, there were many banks and other financial institutions left with non-performing loans burning big holes in their balance sheets. The larger institutions with bigger pockets would buy them, hugely discounted, wrap them up into a product and sell them on as an investment opportunity. Not mentioning however, how poor the credit was of the individuals or companies that were behind the mortgages, who were never able to repay the outstanding loans.
Post Date: December 23rd, 2016