THE BLOG

Red Flags Fly Over Deutsche Bank

06/04/2015 02:39 pm ET | Updated Jun 04, 2016

Only a small part of Decisions: Life and Death on Wall Street is about Deutsche Bank, but 100 percent of subsequent push back and phishing attempts-for private, off-the-record, confidential conversations to "get your take" have been about Deutsche Bank and done in the creepiest possible way. (See also the Huffington Post book review of Decisions written by Nomi Prins, author of All the Presidents' Bankers.)

My response is to ignore these requests, or to respond as I responded to one of the Deutsche Bank whistleblowers, Dr. Eric Ben-Artzi. He approached me in August 2012 -- at first in an anonymous way, using the name "TBTF Quant" sent from a yahoo account. Just to be clear, the answer is "No." My website's contact page should provide a clue to that answer.

Decisions: Life and Death on Wall StreetIf you read Decisions, you know this sort of thing inspires me to shine even more light on a bad situation, and I will have more to say about Deutsche Bank later this summer. Meanwhile, please consider the following.

Shareholders are not happy with Deutsche Bank because earnings targets have not been met. The bank cannot move capital around due to regulatory problems, and that impairs the banks ability to dole out dividends, even if it shouldn't. If you want to know what has regulators so concerned, many clues are embedded in Charles Levinson's widely-ignored March 15, 2015, exclusive Reuters article about tension between risk expert Bill Broeksmit and Deutsche Bank managers in the month before he committed suicide.

Reuters reported that based on its review of internal emails, Bill Broeksmit alleged various loan loss forecasts were wildly understated. Some were, in his opinion, "microscopic." He alleged key historical data was ignored. Bill pushed back when as an independent director, he was asked to present management's point of view to Deutsche Banks's board. He resisted and wrote: "Who is recommending that I do this?" He thought the loss assumptions were too low and stress tests should be done again. Bill did not give the presentation; someone else did.

All of this occurred in the month before Bill Broeksmit killed himself and when he thought Deutsche Bank was exposed to criticism that its models were "too generous."

Very serious consideration should be given to a thorough independent audit and new independent stress tests for Deutsche Bank.