Deutsche Bank's liquidity squeeze a symptom not the cause of selloff

As I wrote here yesterday, Deutsche Bank is suffering from a lack of confidence in the market and its shares have cratered over the last 6 months.

Market maven attribute this to a lack of liquidity for the bank’s massive exposure to loans and derivatives.

But that’s the symptom, not the cause. The German international banking giant is being investigated by global financial regulators for a host of alleged criminal activities dating back to the tenure of ex-Chairman Josef Ackermann.

Word of the broadening investigation by Interpol and other financial regulators into alleged fraud, conspiracy and whistleblower cover ups have been leaking out causing counter-party banks to shy away from dealing with the bank and so there goes your liquidity problems.

The  fact that the bank is currently on its third leadership team in four years speaks volumes for how systemic the charges range and how serious the consequences could be.

Any one of the host of criminal charges that may be filed could immediately put the bank out of business, since DB would then be labeled a criminal enterprise and lose all of its banking and monetary licenses.

I will have much more on this as my reporting goes forward, but needless to say this could be the first domino to fall in a global banking conspiracy inquisition.


US equity futures are down over 2% after Fed chief Janet Yellen gave testimony to House Financial Service committee suggesting neither a bias to raise or lower rates at the next meeting.

Also Hong Kong markets reopened after week-long holiday and traded down 3.9%.

Yellen is in front of the Senate panel Thursday, let’s see how she plays it. Going in she had planned to give the same opening remarks as yesterday, but that may change now.

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