FDIC Vice President Thomas Hoenig
Get Serious About Deutsche Bank!
June 16 (EIRNS)—Sixty years after President Franklin Delano Roosevelt freed the U.S. from the control of Wall Street, with the Glass-Steagall Act that cut "investment" banks off from commercial banks and deposits and then from government support, Thomas Hoenig, the Vice President of the U.S. Federal Deposit Insurance Corporation (FDIC) created by that 1933 Act, has struck terror into the hearts of German apologists for "universal banks," which in Germany means above all, nothing less than Deutsche Bank (DB).
The June 13 interview with Hoenig in Germany's Handelsblatt ran with a big picture of him under the headline, "The Enemy of Wall Street." The subhead continued, "The most important money institutions must be broken up.... A similar attack is being prepared in Europe."
Then on Friday, in an interview with Reuters—widely commented upon—Hoenig attacked Deutsche Bank: "It's horrible, I mean they're horribly undercapitalized." He stated Basel III rules are nothing but computer-modeled fake risk assessments, and that Deutsche Bank is dangerously leveraged.
Deutsche Bank Chief Financial Officer Krause responded to Hoenig with an icy comment, that according to Basel III, we are in good shape. Aside from Handelsblatt, as of today in Germany no one has picked this up except for some marginal Internet websites.
Deutsche Bank became what it is today—24 years after the unsolved 1989 assassination of its then head Alfred Herrhausen—by virtue of its London derivatives and foreign exchange operations, in which it is now number one in the world.
During the 2007-2008 bankruptcy of the London imperial finance system, Deutsche Bank avoided bankruptcy exclusively due to massive bailouts from the U.S. Federal Reserve. In November of 2008 alone, Deutsche Bank took on $66 billion of short-term loans from the Fed. At the same time, it got almost $12 billion in payouts from U.S. taxpayers who covered AIG's fraudulent Credit Default Swap (CDS) derivatives contracts with DB.
It is still not known how much bailout money DB got from the European Central Bank, but what is known is that the U.S. Federal Reserve provided an enormous $8 trillion in U.S. Dollar currency swaps with the Eurozone's European Central Bank headquartered in Frankfurt, this according to a U.S. Government Accounting Office (GAO) report publicized after the U.S. Congress forced the Fed to disclose what bailouts it carried out and what banks got them.
More than half of the Fed's bailouts went to London and continental European banks! The ECB to this day refuses to publicize the beneficiaries of its money-printing bailout operations, and no parliament in Europe has had the guts to demand that information, which almost makes the U.S. Congress look like heroes.
Thomas Hoenig's straightforward clarity has been bolstered by the hard-fought accomplishments in the fight for Glass-Steagall in the United States. With his interventions of the last several days into Germany, calculated decisions were made to force the issue there also. When the bubble bursts, who in Berlin is ready to pick up the bill for the $72 trillion in Deutsche Bank's derivatives portfolio? Should Germany bleed to death for a hedge fund in London, just because it has the word "Deutsche" in its name?