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I'm Charlie. That's the Bloomberg business flash you're listening to. Taking stock with Kathleen Hay and Pim Box on Bloomberg Radio. The lawsuits they just keep coming. Shares of Deutsche Bank today down more than eight percent. The US Justice Department and demanding fourteen billion dollars as part of a settlement having to do with the residential mortgage backed securities. It's just adds to the woes at Deutsche Bank and many
other banks. The bank has previously been sued by various entities for foreign exchange rates, interest rate swaps, liebor ss A bonds as well as treasuries. They're being investigated for for x for metals trading, as well as sanctioned breaches. The list goes on here to tell us what's important and what's not. As Elliot Stein, he is senior litigation analyst for Bloomberg Intelligence, Elliott Boy, this has got to
keep the lawyers busy for quite a long time. It has been for years, um, and it will continue to keep lawyers gainfully employed for a while. UM. You know this, this, uh, this settlement, potential settlement, settlement, anticipated settlement. Is not a surprise when new Deutsche Bank was going to be one of the next big banks to settle with the Department of Justice. Um, but I think the number the fourteen
billion dollar figure. It took a lot of people by surprise. UM. Our Bloomberg intelligence estimate UH for a settlement was about four billion to eight billion dollars, which leads us to believe that, you know, it'll probably wind up being untilds the high end of that range. Okay, I just want to play a clip from Catherine Nixon, the chief investment officer at Northern Trust. She was speaking earlier on Bloomberg and then get your reaction, gentlemen, to this. It's it's
just keeps coming back. It's you know, like Jason from Friday, and it's very hard for us to get away from this. And you know, when you think about what it what it does for the macro outlook in Europe. And you know, we've been talking previously about how the European banking system was facing an income statement issue, not a balance sheet issue with with low and negative interest rates, and now it's become a balance sheet issue again. So it's not
just Georgia Bank. We have UBS, RBS credit Suite who are going to soon be dealing with the same thing. Um and it just keeps on going. That was Catherine Nixon, chief Investment Officer at Northern Trust, speaking earlier on Bloomberg. So, Elliott Stein, what do you make of this is it's just gonna be just the beginning of what is going to be a continuous litigation process. Well, it is for
a lot of European banks. So you know, as most people will recall, Um, the Department of Justice did settle some of its larger r MBS probes with US banks via a city JP Morgan Goldman, Morgan Stanley. Um, but it still is investigating several European banks, just like that clip showed. Um. So in addition to Deutsche Bank, you have Barkley's credit Suites, HSBC, RBS UBS. They're all being investigated by the Department of Justice over r MBS practices
from almost ten years ago. Um. And so we anticipate more settlements with those banks as well. And you know this anticipated settlement with Deutsche Bank. Um, is you know going to tell us a little bit about where those settlements are gonna wind up? Well, I mean, what did Bank America got a seventeen billion dollars settlement? Right? So is Deutsche Bank almost as guilty of this is Bank America. They do just as much wrong in the same scale
as Bank America. Right, So you know, first of all, these are civil fine, so guilty and innocence doesn't you know, guilt and innocence doesn't come into it then not know, I know what you mean. It is civil fraud. The charges are civil frauds so um or the allegations are potentially gonna be civil fraud charges. Um. Look, I think the number is gonna be lower than fourteen billion dollars. I think it's gonna wind up being a little north of eight billion dollars UM, which is a little higher
than the range we had. Uh. You know, it just means, you know, the Department of Justice has taken several factors into account, the amount of evidence of fraud in documents and and um and that they get from other testimony.
But then also the amount of securities that were sold during the relevant time period, the amount of losses that investors have incurred, and games that the bank's got um and you know, be of a because the countrywide was a much bigger player in the R and B S markets during the relevant time That's why it's fine was so large. That's my point. But this fine is almost as much as that. So what did d O J expect. No, it's gonna be it's gonna end up being lower than
seventeen billion dollars. Um, you know JP JP Morgan paid thirteen billion dollars. I think it'll probably be a little south of that. Is there any possibility that this will sink Deutsche Bank? Uh? Well, like they have six billions stock is you know, the stockholders can't be happy about this, look, and I think that's um. You know, the Department of Justice is not in the business of putting banks out
of business. Um, So you know, if it comes to that, I think that's a selling point that Deutsche Bank has in its pocket. They're gonna need some help from the German government. I can't comment on you smiling about that one. So I imagine there must be conversations. I mean, is that typical? Would there be government conversations? But Frow Miracle was asked about this in Bratislava today. She declined to
common as well. But she certainly can't be happy now with the US government just piling fines onto all of these big German benchmark companies. I mean, um, you know, Bosh, I understand it is also being investigated, but that's a company exactly, and Volkswagen had fifteen more than sixteen billion dollars in fines, and now Deutsche Bank, I mean, the US Justice Department is just attacking German national companies. Well, look,
it's not just the German companies. I mean, they're investigating you know, hey, they've find several US banks and now they've moved on to the European banks who were all involved in in selling rnbs during the relevant time. Um So I don't think they're you know, picking out any particular bank, any particular country. This was an industry wide phenomenon, and they're going after the players that they thought acted wrongfully. I wonder if it begs the question did any of
the banks do things that were legal? Now otherways, I understand all the ones that they have now being sued, but did anyone not do something that was well, you know, the government doesn't stand up and write a thank you writer when clearly thank you very much for spending time with us. That Elliot Stein is our senior litigation analysts for Bloomberg Intelligence. Speaking about Deutsche Bank and the US Justice Department seeking fourteen billion dollars worth of fines, you're
listening to taking stock I'm pim Fox. My co host today is Matt Miller. This is Bloomberg. Coming up on taking Stock, will be speaking with Mark Vitner. He is senior economist at Wells Fargo Securities. Will give us his take on consumer prices, the Federal Reserve, and the health of the U. S. Economy.