It looks like Deutsche Bank is heading toward failure. Why might we be concerned?
The problem is that Deutsche is too big to fail — more precisely, that the new Basel III bank resolution procedures now in place are unlikely to be adequate if it defaults.
Let’s review recent developments. In June 2013 FDIC Vice Chairman Thomas M. Hoenig lambasted Deutsche in a Reuters interview. “Its horrible, I mean they’re horribly undercapitalized,” he said. They have no margin of error.” A little over a year later, it was revealed that the New York Fed had issued a stiff letter to Deutsche’s U.S. arm warning that the bank was suffering from a litany of problems that amounted to a “systemic breakdown” in its risk controls and reporting. Deutsche’s operational problems led it to fail the next CCAR — the Comprehensive Capital Analysis and Review aka the Fed’s stress tests – in March 2015. Continue reading
Tag Archives: New York Fed
Empire State index tumbles to recession-era levels
A reading of New York-area manufacturing conditions fell swiftly and brutally in August, one that could make the likelihood of an interest-rate hike next month — or even this year — more remote.
The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009, the New York Fed said. The index, on a scale where any positive number indicates improving conditions, was far worse than the positive 4.5 forecast in a MarketWatch-compiled economist poll. Continue reading
U.S. Federal Reserve to review how it supervises major banks
(Reuters) – The U.S. Federal Reserve said on Thursday it has launched a review of how it oversees major banks, calling on its inspector general to help with the probe after a series of critical reports.
Separate studies to be undertaken by the Fed’s Washington-based Board of Governors and its Office of Inspector General are meant to ensure that “divergent views” about the state of large banks are adequately aired.
The reviews will determine whether frontline supervisors and other officials at the regional Federal Reserve banks, as well as at the board level, “receive the information needed to ensure consistent and sound supervisory decisions,” the Fed said in a press release. Continue reading
Did Ukraine Just Airlift Its Entire Gold Hoard To The U.S. Fed?
Today an outspoken hedge fund manager out of Hong Kong stunned King World News when he said that the entire Ukrainian gold hoard may have just secretly been flown from Ukraine to the United States. William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, also spoke about the incredible implications of this astonishing development. Below is what Kaye had to say in this powerful interview.
Kaye: “There are now reports coming from Ukraine that all of the Ukrainian gold has been airlifted, at 2 AM Ukrainian time, out of the main airport, Boryspil Airport, in Kiev, and is being flown to New York — the presumable destination being the New York Fed….
“Now that’s 33 tons of gold which is worth somewhere between $1.5 billion – $2 billion. That would amount to a very nice down payment to the $5 billion that Assistant Secretary of State Victoria Nuland boasted that the United States has already spent in their efforts to destabilize Ukraine, and put in place their own unelected government.” Continue reading
U.S. Treasury, Fed planning for possible default – source
U.S. Treasury and Federal Reserve officials worried about the growing possibility of a catastrophic default are crafting contingency plans to mitigate the economic fallout if Congress fails to extend America’s borrowing authority, a source familiar with the plans said.
With just eight days before the Treasury Department says the U.S. will hit its $16.7 trillion (10.46 trillion pounds) borrowing limit, lawmakers and the White House remain far from a deal to extend it. Officials are examining what options might be available to calm financial markets if a U.S. debt payment is missed.
The specifics of their planning remain unclear, but the source said an area of special focus is a key bank funding market known as the tri-party repurchase agreement, or repo, market, where banks often use Treasury bills, notes and bonds as collateral for short-term loans from other banks and big money market funds. Continue reading