You guys are lawyers, so let’s look at it this way:
A client of yours is in the fifth year of an agonizingly slow and mindbogglingly expensive fall from grace. After a lifetime of being considered a starched-collar borefest incapable of doing anything interesting, nonetheless naughty, this client has been in and out of court cutting deals on literally every kind of crime he could commit without jail time or outright bankruptcy. The guy has paid out so much in fines that he’s lost his houses, his wife, his cars, and more than 75 percent of his net worth, all because he got more than a little greedy and allowed some really dumb and illegal stuff do go down in his name. Things are so bad for this client that it seems like every news story about every crime now involves him, and we are talking about the dumbest sh*t to the most obtusely high-end villainy. Even a gift-wrapped opportunity to put him in a sham marriage that would shield him from future liabilities was beyond him. You’re at the point where you are considering going pro bono just to give this dude a scintilla of hope (JK LOL, of course you’re not). But now this client has hit bottom, he’s agreed to a clean life, and has cut back on all his vainglory in order to rebuild his good name and his career, remaining acutely aware that there will still be some fallout and suspicion from his years of indiscretion.
Now imagine that he just told you he was, up until a few months ago, in a business relationship with the world’s most famous sex criminal.
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Congratulations, now you know what it’s like to represent Deutsche Bank:
In recent years, Mr. Epstein was a client of Deutsche Bank’s private-banking division, which caters to ultrawealthy individuals and families. The bank provided Mr. Epstein with loans and wealth-management accounts, as well as trading services through its investment banking arm, according to two people familiar with the relationship. At one point, compliance officers at Deutsche Bank raised concerns about transactions by Mr. Epstein’s company, because he posed reputational risk to the bank, the people said.
Deutsche Bank managers overruled their concerns, the people said. They noted that there was nothing illegal about the transactions and that Mr. Epstein was a lucrative client.
Earlier this year, the bank ended its relationship with Mr. Epstein.
That’s the kicker of a NYT piece from yesterday detailing the murky finances of Jeffery Epstein, a man now thought to be a one man epidemic of pedophile sex trafficking. In the story, reporters sift through years of rumor and research, finding that even many the people who were closest to Epstein ended up distancing themselves before he was first convicted of sex crimes in 2008. We now know that even famed scruples-haver Donald Trump walked away from a personal/professional relationship with Epstein before the arrests hit the fan.
But not Deutsche Bank. No, the German lender that should have been focused on nothing other than cleaning up every possible loose end since it started paying 11-figure fines to regulators around the world for being the Zelig of modern money laundering and financial fraud enabling was fighting itself to stay in business with a guy who was a proven sex criminal and a widely alleged investment con man.
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We’ve admittedly been pretty hard on Deutsche Bank over at Dealbreaker, but only because we reveled a bit in the schadenfreude of a conservative German bank going absolutely apesh*t on some kind of mid-aught loan volume American Rumshpringa that left it wildly overleveraged and over-indicted. And we felt pangs of moralistic guilt watching 18,000 people get axed from the bank’s investment bank and trading operations on Monday, but this new detail on Epstein really pulls back the curtain on the institutional rot that infected the bank’s U.S. operations.
Large banks are essentially large children in search of candy, except the candy is profits. The only thing preventing them from grabbing all the candy and making themselves sick are laws and regulations, we cannot rely on them to act morally. It’s not their nature. But even most children have an instinctual morality, one that prevents them from doing things that are well beyond social norms just to get a little candy. Deutsche Bank’s U.S. private banking leaders have proven that their operation is basically a sociopathic child, incapable of being given free will, and we have fully come to believe that Jeffrey Epstein is just the most toxic tip of a truly nightmarish iceberg.
Deutsche Bank U.S. has proven to be a dangerous liabilty over the past few years. Yesterday, we learned that it is a (somehow still) metastisizing cancer.
So, let’s just put our cards on the table: After lending to Jared Kusnher, Donald Trump, Paul Manafort, and Jeffrey Epstein, maybe it’s time for Deutsche Bank to drop the lederhosen and show us everyone it should never have been in business with in the first place. Clean starts only work when you’re not secretly still filthy.
Jeffrey Epstein’s Fortune May Be More Illusion Than Fact [NYT]
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Topics
Banks, Deutsche Bank, Finance, Fines, Jeffrey Epstein, Regulation
