- Feb 19, 2015
- 616
- 23
- 81
In 2008 there was something which in the financial industry was called "the big short". This book about it (with an upcoming blockbuster movie coming soon) and this article are probably known to most.
Hopefully somebody can correct me, but afaik in 2008 banks like Goldman Sachs had bought credit default swaps (CDS) from AIG betting against a default of Lehman, so when that indeed happenend, AIG (with the help of the Fed) had to payout to Goldman, which in that way made huge profit from this.
But how does Deutsche Bank (DB) now fit in a scenario like the one above? In it's quarterly reports its mentioned DB has lots of derivates in port, but what does that have to do with the garbage bonds Lehman had in portfolio?
Also, DB's response to having those derivates, is that they want to hedge their risk. That's different from AIG who was fully exposed when Lehman collapsed.
So anybody can clarify what Deutsche Bank has to do with the 2008 Lehman Brothers scenario, and what its role would be?
Hopefully somebody can correct me, but afaik in 2008 banks like Goldman Sachs had bought credit default swaps (CDS) from AIG betting against a default of Lehman, so when that indeed happenend, AIG (with the help of the Fed) had to payout to Goldman, which in that way made huge profit from this.
But how does Deutsche Bank (DB) now fit in a scenario like the one above? In it's quarterly reports its mentioned DB has lots of derivates in port, but what does that have to do with the garbage bonds Lehman had in portfolio?
Also, DB's response to having those derivates, is that they want to hedge their risk. That's different from AIG who was fully exposed when Lehman collapsed.
So anybody can clarify what Deutsche Bank has to do with the 2008 Lehman Brothers scenario, and what its role would be?
Facebook
Twitter