Germany Will Never Let ECB Shut Deutsche Bank
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The first people to tell the public that the world’s oldest bank was cooking its books weren’t the bank’s executives, its outside auditors at KPMG, its regulators at the Bank of Italy, or anyone else who had a duty to keep the place honest. They were journalists with a good source: a stack of documents from another bank that helped craft the scheme.
About two weeks ago, Bloomberg News reporters Elisa Martinuzzi and Nicholas Dunbar broke the story that Deutsche Bank AG designed a derivative in December 2008 for Banca Monte dei Paschi di Siena SpA that hid the Italian lender’s losses before it sought a 1.9 billion euro ($2.6 billion) taxpayer bailout in 2009.
The ensuing scandal threatens to be a major issue in Italy’s elections in a few weeks. It’s also a reminder that bank regulators, no matter what country they’re from, have proven time and again to be unreliable protectors of the public interest. Remember this for next year, when oversight of Monte Paschi and Europe’s other large banks is scheduled to move to the European Central Bank.
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