Ah, yes, to be too big to fail. Late breaking from Reuters:
The German government is pursuing discreet talks with U.S. authorities to help Deutsche Bank (DBKGn.DE) secure a swift settlement over the sale of toxic mortgage bonds, according to sources in Berlin.
Until now, German officials have played down their role in the standoff, saying it is up to Deutsche to work out a deal with the U.S. Department of Justice (DOJ), which is demanding up to $14 billion to settle claims the lender mis-sold mortgage-backed securities before the financial crisis.
But government officials in Berlin, speaking on condition of anonymity, told Reuters they hoped to facilitate a quick deal that would buy Deutsche Bank time to regain its footing.
One senior government official told Reuters there was “contact at all levels” between German and American officials.
…The resolution of the crisis through a reduced settlement is crucial for Chancellor Angela Merkel, who faces a federal election next year. It could be political poison for her government to rescue a bank that got into trouble through speculating. At the same time, officials recognise that Germany’s biggest bank, which employs around 100,000 people, cannot be allowed to fail.
…The first government official said the ideal solution for Germany in the longer term would be a merger between Deutsche and its smaller domestic rival Commerzbank (CBKG.DE), even if it would be better to wait several years until both banks were cleaned up before sealing such a deal.
…”We are not Austria,” the official said. “We are the biggest economy in the European Union, one of the world’s leading exporters. We need a big bank with a European and international presence but which is anchored here in Germany.”
…The official added that merging Deutsche with a European rival was fine in principle but only if Germans controlled the combined entity.