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Are German Banks Next To Seek Putback Claims From Bank Of America?

Tyler Durden's picture


While everyone has been focusing on American institutions over the past several months looking for entities that may have claims on Bank of America and other domestic banks which have misrepresented their mortgage portfolios, a question that nobody is asking is why are European, and specifically German banks, not joining the fray? After all, when it came to finding idiot investors, Goldman et al's rolodex would always immediately jump to those in the Ruhr and Rhine valleys. And sure enough, as many German (Landes)banks ended up on the receiving end of Wall Street innovation, and thus bankrupt, it has been shocking that very little initiative has been demonstrated by German investors who lost most or all of their capital when subject banks ended up purchasing misrepresented securities. All this may be changing soon (see below). But even if it isn't, a key question is just what leverage does America have over Germany to prevent the country from pursuing rightful putback demands against the mortgage banks. Our guess: those lovely FX lines from Benny and the Inkjets. After all recall that the Swiss tax disclosure was the quid pro quo in exchange for the unlimited Fed credit facility to the SNB when the country was on the verge, and when UBS needed a bad bank to make sure the Swiss giant survived.

As for the recent developments in Germany we turn to Debtwire and Allison Pyburn:

Political pressure is growing in Germany for banks to collaborate with US RMBS buyback movements, according to a source with knowledge of the situation and German media reports.

The nation’s minority party is petitioning the German government to divulge names of banks that have not signed on to the coalition by 15 December, the source said. The country’s banks hold billions in US non-agency RMBS.

The US investor coalition, the RMBS Investors Clearing House, is in conversations with three German banks, said Greenwich Financial CEO Bill Frey. “There is an awareness in Germany now that if the German banks don’t take advantage of this they won’t participate in the recovery.” Among the German banks which have voiced interest in pursuing US banks for mortgage-related losses are KFW and WestLB, according to a 24 November report in German newspaper Handelsblatt. In August, Germany’s state-owned development bank KFW collected USD 150m from Goldman Sachs as part of a settlement with the SEC. KFW lost billions on bad mortgage investments following a controversial rescue of IKB Deutsche Industriebank after it collapsed, according to the report. (The German government sold 90% of the bank to Dallas, Texas-based Lone Star in Funds in 2008.)

For those who may wish to pursue this somewhat curious development further may do so by reading the following article in the Handelsblatt. Ultimately, we are convinced that with the Fed holding all the cards, not to mention the money, and with domestic voices already silenced courtesy of upcoming settlements, the foreign interests don't stand a chance in getting a fair and equitable treatment when faced with companies whose mere existence is the pureset definition of pervasive fraud (and where justice would doom thousands of corrupt thieves to a life of middle-class existence).

h/t Manal


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Tue, 01/04/2011 - 16:29 | Link to Comment Larry Darrell
Larry Darrell's picture

Why haven't the Germans sought put backs is a very good question.

But if the rumors that much of Germany's gold is being held at the FRBNY are true, I'd say they are stuck doing the bidding of the bernank.

Tue, 01/04/2011 - 20:11 | Link to Comment greyghost
greyghost's picture

maybe because germany is an occupied country.

no treaty of peace has ever been signed by the united states and the german republic completely

ending world war II. doesn't an occupied country do as it is told....just asking? 

Wed, 01/05/2011 - 00:09 | Link to Comment Motorhead
Motorhead's picture

Nazi Germany surrendered to the Allies in 1945 and became a charter member of NATO just a few years later...not sure where it "says" that a "peace treaty" must be signed.

Oh, and BTW, wasn't big-time central bank pusher Paul Warburg a German?

Wed, 01/05/2011 - 12:35 | Link to Comment greyghost
greyghost's picture

because in any court of law germany is an occupied country and full control of the german STATE rest with the occupiers. nothing gets done without the approval of the occupier and their occupation forces...i.e. united states military forces. my father earned 5 pacific campaign medals during wwII and one navy occupation medal over japan. the occupation of japan lasted until a treaty of peace was signed in san francisco in the early fifties between the nation of japan and the united states. no such treaty has ever been signed between the german people and the american people.....why?????? 

Tue, 01/04/2011 - 20:28 | Link to Comment Logans_Run
Logans_Run's picture

When the Bernank farts the world takes notice! What it must feel like to have become the most powerful man in the world? And from humble beginnings as an academic no less! Quite impressive!

Tue, 01/04/2011 - 16:32 | Link to Comment truont
truont's picture

what leverage does America have over Germany to prevent the country from pursuing rightful putback demands against the mortgage banks?

The NY Fed has most of Germany's gold.  And if Germany ever wants to see their gold again, they'd better back off of the Banksters.  If you know what's good for you, Germany....

Tue, 01/04/2011 - 16:53 | Link to Comment b_thunder
b_thunder's picture

I heard that John McClane has been reassigned. 

Germany will send Simon Grubers' brother and his crew to collect das Gold.


Tue, 01/04/2011 - 16:37 | Link to Comment rosiescenario
rosiescenario's picture

....and Iceland?

Tue, 01/04/2011 - 16:39 | Link to Comment Voodoo-economist
Voodoo-economist's picture

not sure what you are talking about, the Swiss can print their own money...besides that, the bad bank was paid for by the taxpayers, not the fed. Are you missing something or am I?

Tue, 01/04/2011 - 16:39 | Link to Comment A Man without Q...
A Man without Qualities's picture

My assumption was that the Landesbanks had strict investment criteria, so tended to buy the more senior tranches, which is exactly what the Fed purchased.  There may have been an agreement to buy all higher rated securities at par, and not to pursue for further damages plus guarantees of lending lines...

Tue, 01/04/2011 - 16:39 | Link to Comment Cdad
Cdad's picture

What a great situation this Blight on America bank thing is.  Here, the truth is pouring out of the institution...while criminal syndicate Wall Street banks everywhere are upgrading the company and "putting their best clients into BofA."  Perfect!

As I said earlier this morning in reference to something Scott Redler of T-3 had said, sometimes there is nothing better for illuminating a situation than the words of The Street itself.

So let the criminal syndicate Wall Street banker whores who never miss an opportunity to pimp their book over the Blow Horn [CNBC] declare their love for the Blight on America bank.  Let them mark the shares up.  Go ahead...I dare them.

And more market credibility dies face down on Wall Street.  Sweet!

[the time to short Blight on America draws closer]


Tue, 01/04/2011 - 16:41 | Link to Comment HL Shancken
HL Shancken's picture


"...According to Kalashnikov, talk about various bodies in Russia doing this or that is nonsense. It is all a deception. There is one class, working as one vast criminal enterprise, holding down the entire society. "And being so rich," added Kalashnikov, "and having no serious challenges within the country, they are still well aware that the only way to place the stolen wealth properly would be to deposit this wealth in Western banks, in Europe, in Cyprus, in Switzerland, and elsewhere; because they know the source of this wealth is questionable. They understand that this money could be taken away from them at any time. So they are eager to launder this money in the West. For this purpose, they need close cooperation with Western banks and institutions to legalize their money. That's what they need, therefore, they naturally cultivate closer links with Western governments and businesses. They also realize that the Western banking authorities will be tempted to look deeper into the origin of all this money. So, in order to make the West more cooperative, the Russian nomenklatura needs to be properly armed, and be aggressive at the proper level. They always put the West on the horns of a dilemma. Will it be confrontation or cooperation? If cooperation, then you abolish visa requirements for elite Russians, you abolish certain legal obstacles when it comes to investing Russian money in the West. Let us cooperate, they propose. If not, you may have some trouble in military terms. So, Russia may become unpredictable and aggressive. It is a soft blackmailing of you."

There is another side of this blackmail which Kalashnikov didn't mention. When Western politicians and businessmen get tangled up with Russia's mafia elite, they enter into a partnership from which they cannot easily extricate themselves. Western bankers who have laundered Russian money are now part of the Russian mafia's scheme. They have purchased the infamous one-way ticket. They cannot go back. They cannot get out. It is too late. Now they must follow along, and the Russian criminal machine colonizes the unsuspecting Western capitalist. The ultimate exploitation of this process may not be far to find. As the criminal system advances, the leaders of the West must keep silent; for they were the first to advocate "engagement" with the Russians. How can they publicly admit that they have been drawn in, swindled, and tainted?..."


What you don't know will hurt you, Zerohedge.



Tue, 01/04/2011 - 16:52 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Why else would Soros be meeting with the Bank America/Nomenklatura?

Tue, 01/04/2011 - 16:50 | Link to Comment Tic tock
Tic tock's picture

Maybe it's a NAZI party thing..

Tue, 01/04/2011 - 17:22 | Link to Comment robertocarlos
robertocarlos's picture

I thought all the Russian criminals were Jewish.

Tue, 01/04/2011 - 17:46 | Link to Comment HL Shancken
HL Shancken's picture

From the book
The KGB and Soviet Disinformation
by Ladislav Bittman
copyright 1985
pg 8


..."An operation designed in the spring of 1964 under the cover name "Neptune" and conducted in cooperation with the KGB became a test case of the new department's operational skills and imagination. One night during the last week of May 1964, I plunged into Bohemia's Black Lake and carefully placed four large asphalt-coated cases on the bottom. Several weeks later, the cases were "discovered" by a Czechoslovak television team shooting a documentary film on legends involving the lake. The find was presented to the public as an important set of Nazi archives. It marked the beginning of an extensive disinformation action against West Germany, and it was evaluated in Moscow as one of the most successful operations of the period.

Original Nazi documents from Soviet and Czechoslovak archives were presented to the press as documents recovered from the Black Lake and were used in Italy, France, Austria, and West Germany to compromise certain individuals and damage West Germany's public image. Although the operation did not convince the West European public that the present-day regime in West Germany was a practical and ideological outgrowth of Nazi Germany, it contributed to the decision by the West German government to extend the statute of limitations for the prosecution of war crimes."...



Tue, 01/04/2011 - 17:30 | Link to Comment Shylockracy
Shylockracy's picture

Why not stop pretending Germany is a sovereign country?

Carlo Schmidt, the Social-Democrat legal expert who wrote the Basic Law (the pretended constitution) called its final form in 1949 a "modality of foreign domination". The state diet of Bavaria rejected the ratification of the Basic Law in 1949 in an open call vote, and it has not ratified it since. No German knows or decideds upon US troop levels or nuclear warheads stationed in the country. All US troops and hardware are paid in full by the German taxpayer to the tune of 2 billion Euros a year, and no one in Parliament has the guts or interest in brooching the topic. The decisions of the International Military Tribunal and other decisions made by the 4 allies have been incorporated into German law through the Überleitungsvertrag, and the backdoor has been kept open and restated in the 2+4 Unification Treaty of 1990.


There are many other obvious reasons to categorize Germany as a US protectorate at best, and a reservation at worse, but the the secret agreements between the US government and the German government trumps them all. These agreements were described by retired General Gerd Komossa, ex-chef of the allied military counter-espionage in Germany (MAD). In his book, Die deutsche Karte - Das verdeckte Spiel der geheimen Dienste. Ein Amtschef des MAD berichtet (Ares-Verlag, Graz 2007), he states categorically that the secret agreements signed in 21 May 1949 gave explicit and secret primacy of the Allies over the German Basic Law, including the right to control the media until 2099.

The existence of the secret protocols is not questioned anymore, but German government and assorted hangers on like pointing out that they have been "suspended" by the unification treaty, which is strictly speaking, not true.

Obviously, you will never hear of that in the German press, but mercifully, Russia Today filed a report on the book.


Tue, 01/04/2011 - 17:37 | Link to Comment HL Shancken
HL Shancken's picture

From the book
The KGB and Soviet Disinformation
by Ladislav Bittman
copyright 1985
pg 2-3

"The Soviet apparatus for propaganda and disinformation is undoubtedly the largest and most effective system in the world. Until the late 1950s, the Soviet conducted propaganda campaigns against the United States, its major rival, primarily through official governmental or party channels, but they were not skillfully designed or directed and their success was rather limited. In 1959 the Soviet Union established within the KGB (the State Security Committee) a special unit called the Department for Active Measures, which specialized in black propaganda and disinformation, and between 1961 and 1964, all Soviet-bloc countries established similar departments and conducted intense anti-American propaganda campaigns throughout the world. By the late 1960s, the status and role of the Department for Active Measures, under the command of General Ivan I. Agayants, was further enhanced and the department became known as Service A. The 1970s was a period of intense covert operations and major qualitative improvements in the design of these operations.

In fact, the unprecedented increase in the number of KGB operatives sent to the United States in the 1970s surprised even old-timers at the Federal Bureau of Investigation. The KGB and Soviet satellite countries recruited individuals in all social and political categories, including American businessmen, scientists, Washington bureaucrats, and even CIA operatives...."

..."With the help of satellite nations, the KGB launched hundreds of operations designed to create confusion and discredit the United States and other NATO countries through forgery of documents, well-placed agents of influence, and manipulation of mass media.

..."active measures" directed by the KGB are designed for internal demoralization and erosion of power in target countries. Soviet disinformation strategists know that a single covert action, however precisely designed, cannot tip the balance of power between the Western Alliance and the Communist bloc. But they believe that mass production of propaganda and disinformation over a period of several decades will have a significant effect. The strategy seems to work."



Tue, 01/04/2011 - 17:26 | Link to Comment HL Shancken
HL Shancken's picture
A Thousand-And-One Traitors

Submitted by JR Nyquist on Mon, 24 Dec 2001



"...Azbel reported Hanssen's improper behavior to FBI authorities. He also said that Russian "journalists" were sneaking into the FBI's offices in New York. So what did the FBI hierarchy do?

They forced Azbel to take a lie detector test.

No investigation was opened against Hanssen. Loud snoring was the only discernible sound from the Bureau regarding his case. A few years passed and there appeared yet another informant who filed a negative report on Hanssen in 1990. In fact, it was Hanssen's own brother-in-law, Mark Wauck, who noticed that Hanssen "was hiding thousands of dollars in cash" and "spending too much money for someone on an FBI salary."

Wauck was not only Hanssen's brother-in-law, he was also an FBI official who reported his suspicions. But to Wauck's surprise no investigation was started. His information about Hanssen was ignored. Here again we see that problems run deep at the FBI. By looking at the Hanssen case we can see that America's intelligence services are inept. Even when evidence and testimony emerges the FBI will not open an investigation. When a Russian translator makes an accusation, when other FBI agents (like Wauck) see a problem, nothing is done. And this is typical of American counterintelligence organizations.

In the 1980s a Navy petty officer named Glenn Souther stole the U.S. Navy's nuclear war plans (among other items). Souther's wife, after divorcing him, had warned the Office of Naval Intelligence about her husband. Why did she suspect him? He was reading Marxist books and talking communism, she told a Navy investigator. There were also frequent absences from home without explanation. But the Office of Naval Intelligence dismissed the wife's suspicions without further inquiry...."



"...And now for the biggest spy story of all, which comes to us at the end of a year that began with Hanssen's arrest.  According to Charlie Smith at, "the FBI has stumbled on the largest espionage ring ever discovered inside the United States." We are talking, of course, about a possible Mossad or Russian intelligence operation. (Readers should recall that many Israeli citizens are actually from the "former" Soviet Union).

Approximately 100 Israeli citizens are being held by the U.S. Justice Department. Implicated in espionage, these Israelis have been tied to foreign criminal and intelligence groups (e.g., the Russian mafia and Russian military intelligence). The emphasis here should be on the word "criminal," since Russia is now the world's center for organized crime.

Two Israeli-owned companies have also been implicated. The companies in question are responsible for performing, according to Smith, "almost all of the official wiretaps for U.S. local, state and federal law enforcement."

For those familiar with the history of U.S. surveillance and counterintelligence this is not too surprising. The American bunglers are up to their old tricks (if incompetence could be classified as a "trick"). People wonder how a few Arabs with box-cutters could hijack four aircraft and kill thousands, causing billions of dollars in damage. Well, you can stop wondering.

For those readers worried about government wiretaps the news is far worse than the most paranoid conspiracy theories would have suggested. All this time there was no threat of the U.S. government spying on us. It was the Russian mafia, Mossad and the GRU that had free reign to tap telephones and listen to calls. The Russians and their criminal networks, having penetrated key Israeli-owned companies, went on to penetrate U.S. law enforcement at its intelligence-gathering center...."



"...It now appears we are about to learn a hard lesson. Our banking, our stock market - not to mention law enforcement - are totally vulnerable to clandestine foreign operators. It is not simply a question of terrorism. There are issues of economic sabotage to be explored as well...."



Tue, 01/04/2011 - 18:33 | Link to Comment Bartanist
Bartanist's picture

Does it not bother anyone that the only bank being targeted for putback is the Charlotte bank and not the NY banks such as JPMorgan and Citibank which are a deep into the same crap as BAC?

Tue, 01/04/2011 - 18:54 | Link to Comment Rogerwilco
Rogerwilco's picture

Watch it Bartonist, talk like that is indicative of thought crime. BAC is good, the others are double-plus good. Yes, all the big banks did the same deeds, but only BAC is guilty. Once you accept that dissonance, your mind can be free again.

Tue, 01/04/2011 - 20:39 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Awful lot of screwball posts, maybe to stop readers from wondering about the article itself -- in which one must wonder when Germany's banks will call in the markers.

Wed, 01/05/2011 - 04:52 | Link to Comment Mentaliusanything
Mentaliusanything's picture

Given a protected Virgins hymen - why the fuck not.

legs are well spread, fear is high and the smell emanating, says, go the fuck for it.

Cry me a river. you asked to be lose with the truth, Slut

Wed, 01/05/2011 - 08:49 | Link to Comment Jiiins
Jiiins's picture


Does anyone have any supporting research for this sentence: "After all recall that the Swiss tax disclosure was the quid pro quo in exchange for the unlimited Fed credit facility to the SNB when the country was on the verge"?


I know a good journalist in Switzerland who would appreciate it very very much.






Wed, 01/05/2011 - 10:35 | Link to Comment yellow submariner
yellow submariner's picture

Why are Swiss, Chinese, Indian, French, Italian, ... buyers of fraudulent MBS not preparing law suits like Pimco and Blackrock?

If Germany pushes noisily such law suits, it could damage Deutsche Bank, which is also sued for fraudulent MBS in the US ;).

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