October 6, 2016

Why Deutsche Bank Isn’t Lehman

Over the past few days, I’ve gotten several questions about the Deutsche Bank dealings. The news of the bank’s woes is prompting some people to compare it the Lehman Brothers demise.  Is it a fair comparison? Not really and here’s why. Why did Deutsche Bank affect markets? With markets already seesawing from the current presidential race and the possibility of interest rates rising, the Deutsche Bank crisis is just another crashing wave in the sea uncertainty. For a brief moment, you had one of the world’s largest banks causing investors to agonize. They questions, would there be another “Lehman moment” sparking a new financial crisis? The scandal-prone German banking giant is about to face some serious financial penalties here in the states. The bank is in hot water for its role in the financial crisis; the bank’s problems are causing key clients to distance themselves. This has analysts worried about the firm’s financial health. The woes negatively affected the Dow Jones Industrial Average, causing a 200 point drop on Thursday.  A similar loss of confidence in 2008 with Lehman Brothers caused counterparties or major clients asking the cash-strapped firm for their money back. This triggered its collapse and the beginning of the financial crisis. […]