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’Deutsche Bank Needs Radical Surgery’—The Herrhausen Procedure

Sept. 2, 2016 (EIRNS)—Bloomberg News joined many other financial sources in the United States and Europe reporting that Deutsche Bank could be nearing the precipice of a gigantic bank failure. In "Deutsche Bank CEO Weighs Drastic Steps," the news service reviewed again the series of steps considered in recent days by Deutsche Bank management—merger with Commerzbank, selloff of investment bank units, selloff of wealth management units—and then rejected as either not possible, "not necessary," or both.

The sequence echoes the final weeks of Lehman Brothers’ management, deluded that it "had time" to prove the bank was solvent, etc. Now a major management meeting is to occur over this weekend, to consider options once again.

"‘The management at Deutsche Bank is desperate,’" Bloomberg quotes Dieter Hein, a German analyst who follows German and Swiss financial firms. "‘They have realized that their current strategy is wrong and they’re looking at what possibilities they still have.’" Another warning comes from a former bank examiner:

"‘Deutsche Bank needs radical surgery,’ said Mark Williams, a master lecturer on finance at Boston University and a former bank examiner at the Federal Reserve. ‘It has to act more aggressively to restore its capital levels and become financially sound again.’"

And another:

"‘There’s clearly a very lively debate going on within Deutsche Bank as to the way forward,’ said Piers Brown, an analyst at Macquarie Bank in London. ‘I view it all quite negatively—it implies the current restructuring is failing and that there’s no consensus at the senior management level on what to do about it.’"

Another straw in the wind being debated in financial media, is the bank’s refusal on Tuesday to redeem gold certificates (i.e., to deliver physical gold) to investors in a gold bond of which Deutsche Bank is the listed sponsor and responsible for such delivery on demand.

As Deutsche Bank’s clock ticks down, the reality remains as Lyndon LaRouche set it out in June: The German economy requires that the bank be saved, but a new managing committee must write off its immense derivatives holdings and return it to the commercial bank/development bank policies of its assassinated former chief, Alfred Herrhausen.

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