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Comment by cm2187 | Hacker News Reader

I agree. Although in the case of banks, a panic can be self fulfilling. DB may be well capitalised and have sound assets, but if there is a market panic and no wholesale investor will roll their funding with them (as happened after Lehman went bust), and retail depositors start a run on the bank, the bank will go bust. Even if it is solvent.

The liquidity requirements introduced after Lehman should be sufficient for banks to sustain another Lehman scenario but you could imagine an even more severe stress.

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Hell will freeze over before the German government lets Deutsche Bank go bust.

They let Greece go bust rather than the Landesbank.

Actually I think what would happen would neither be a bail out or DB going bust, but a bail-in (which I described in another post):

https://news.ycombinator.com/item?id=12065996

>They let Greece go bust rather than the Landesbank.

It more a case they may have to bail out Greece rather than letting it default and take out the Landesbank.

A lot of the problems could be prevented by the German controlled ECB easing monetary policy and aiming for say 2% inflation rather than the present 0%.

As I like to point out whenever people claim that the ECB is controlled by Germany: Germany has a very small minority of the votes in the controlling gremium.

Fair enough - my bad.

Influence in the Euro institutions is largely determined by the size of the economies and their contributions to the budget. Germany is first among equals.

As long as we're talking votes, not "soft power", Germany is a dwarf.

European institutions are largely determined by "every member gets something", not economic size.

In this example, the Governing Council of the ECB has 25 members, two of which are German.

It is "first among equals" in the sense that no country has more members and few have as many, but what you're insinuating is factually wrong.

When it comes to any European organization, just assume that each member country has one vote and you'll always be very close to reality.

I'm sorry - I don't mean to imply that Germany is all powerful. The power dynamics of different EU institutions are complex and sometime unwieldy. And often a single country can block something. However I respectfully disagree with your last sentence - assuming each country has equal power is not reality but fantasy.

The various Landesbanken (banks of the states), the Bundesbank (federal bank) and KfW (kinda the federal investment bank) will be kept afloat in some way (although there might be mergers, as there were in the past), since they're public entities.

However Deutsche Bank is a private company. It's still likely to be kept alive, but it's not as certain.

You are right that DB is private, nevertheless the bank is deeply intertwined with financing the Deutschland AG. Without them Daimler, BMW, Bosch, etc all would have to find new partners for financing their day to day operations.

DB is actually one of the less well capitalized major banks in the world:

http://www.bloomberg.com/news/articles/2016-02-12/deutsche-b...

As others have pointed out, the German government would probably be ready to bail them out if they ever ran into trouble, though that would likely be a painful process for existing common shareholders.

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