Dark Towers: Deutsche Bank, Donald Trump

 

Overview

The book investigates the history of Deutsche Bank, particularly focusing on its transformation from a traditional German lender into a global investment bank and its intricate relationship with Donald Trump. It explores the bank's ascent fueled by greed and reckless decisions, its involvement in various scandals, and the eventual consequences, including its role in enabling Trump's rise to power.

Key Themes and Events

• Early History and Transformation:

  • Deutsche Bank's origins in the 19th century, focusing on international commerce and German industrial growth.
  • The bank's shift towards high-risk investment banking in the late 20th century, led by figures like Edson Mitchell and Bill Broeksmit.
  • Influence of American executives and Wall Street culture on the bank's operations and values.

• Scandals and Criminality:

  • Deutsche Bank's involvement with the Nazi regime, including financing Auschwitz.
  • A series of scandals related to money laundering, tax evasion, and market manipulation.
  • The bank's culture of prioritizing profits over ethics and compliance.

• Relationship with Donald Trump:

  • Deutsche Bank as the primary lender to Donald Trump and his businesses over two decades.
  • The role of specific individuals like Rosemary Vrablic in managing the Trump relationship.
  • The bank's internal debates and concerns about lending to Trump due to his history of defaults and questionable business practices.

• Key Figures:

  • Bill Broeksmit: A central figure in Deutsche Bank's transformation, known for his expertise in derivatives and risk management, but also for his personal struggles and eventual suicide.
  • Edson Mitchell: The charismatic leader who spearheaded Deutsche Bank's push into global investment banking.
  • Joe Ackermann: The CEO who drove the bank's aggressive pursuit of profits and global expansion.
  • Rosemary Vrablic: The private banker who managed the Trump relationship and facilitated loans.
  • Anshu Jain is a central figure who plays a significant role in Deutsche Bank's transformation and its relationship with Donald Trump. Here's a breakdown of who he is in the context of the book, represents the forces that transformed Deutsche Bank into a global investment powerhouse, but also contributed to its ethical failings and ultimate crisis. Being Indian Jain faces discrimination and prejudice within the organization.
  • Rajeev Misra: Jain's Protégé and Friend: Misra is a close friend and protégé of Anshu Jain, having known him since childhood in India. He follows Jain to Deutsche Bank and becomes a trusted lieutenant.
  • John Cryan: The CEO brought in to clean up Deutsche Bank after the Ackermann/Jain era. He faces the difficult task of restructuring the bank, dealing with regulatory issues, and trying to restore its reputation.
  • Rolf-Ernst Breuer: The CEO before Ackermann, who makes the fateful decision to acquire Bankers Trust, setting Deutsche on a path toward Wall Street and high-risk investment banking. 
  • Jack Brand: Also known as Jacques Brand, he is the CEO of Deutsche's U.S. businesses, responsible for instilling ethical standards and risk controls.
  • Justi Kennedy: Serves as a point of contact for Trump, and later takes a senior position.
  • Anthony Kennedy: Kennedy’s father and Supreme Court Justice.

• Consequences and Downfall:

  • The bank's near collapse due to excessive risk-taking and mismanagement.
  • Government investigations and penalties for various illegal activities.
  • The transformation of Deutsche Bank from a national icon to a troubled institution facing an uncertain future.

• Broeksmit's Legacy and Death:

  • Broeksmit's attempts to rein in the bank's recklessness and his eventual disillusionment.
  • His suicide and the subsequent investigation into Deutsche Bank's activities.
  • His son, Val Broeksmit's, quest to uncover the truth about his father's death and the bank's role in it.

Overall Significance

The book paints a portrait of a bank that lost its way in pursuit of profits, engaged in unethical and illegal behavior, and ultimately contributed to the rise of a controversial figure in American politics. It serves as a cautionary tale about the dangers of unchecked ambition, the importance of ethical leadership, and the far-reaching consequences of financial recklessness.

Details

chapter  1  "A Criminal Enterprise,"

Chapter 1 of "Dark Towers," titled "A Criminal Enterprise," sets the stage for the book by exploring the early history of Deutsche Bank and drawing parallels between its past actions and its later involvement with Donald Trump. Here's a summary:

• Villard and the Railroads: The chapter opens with the story of Henry Villard, a German immigrant who becomes a railroad tycoon in the late 19th century. He secures financing from German banks, including Deutsche Bank, but his company collapses due to excessive debt, causing significant losses for investors. This sets a precedent for Deutsche Bank's later dealings with individuals who employ "great personal charm and shrewd publicity" but whose businesses rest on shaky foundations.

• Deutsche Bank's Origins: The chapter recounts Deutsche Bank's founding in 1870 to facilitate international commerce, particularly between German and other European companies. It highlights the bank's early focus on industrial growth and its imperial ambitions to help Germany establish a global presence.

• Georg von Siemens: Siemens is the bank's first leader and a cousin of the founder of Siemens. He doesn't know much about banking but tries to look erudite.

• Connection to the Nazis: The bank is transformed into a financing source for the Nazi military machine. Jewish members of the bank's board were forced to resign, and the bank began pressuring its clients to remove Jews from their boards of directors.

• Post-War Transformation: After World War II, Deutsche was split into ten regional institutions that were re-fused later on. Hermann Abs was elected to be their leader.

• Herrhausen's Vision: The bank needed to return to the international stage, and Herrhausen started the integration of Deutsche bank into what he saw as the promise of the modern capitalist age.

• The Assassination: Herrhausen was assassinated by the Red Army Faction, a group of Marxist terrorists.

• Foreshadowing: The chapter foreshadows Deutsche Bank's future troubles, suggesting that its inability to say no to clients and its culture of prioritizing profits over ethics would ultimately lead to its downfall. It hints that the story of Deutsche Bank is not just a financial one but also a moral one, with far-reaching consequences for the world.

Chapter 2 :"Edson and Bill," 

Chapter 2, "Edson and Bill," focuses on the backgrounds and early careers of Edson Mitchell and Bill Broeksmit, the two key figures who would later transform Deutsche Bank's investment banking division. Here's a summary:

• Edson Mitchell's Humble Beginnings: Mitchell's early life is depicted, including his work on an egg farm and his determination to escape a life of financial insecurity. He attends Dartmouth's business school and later joins Bank of America.
• Mitchell at Merrill Lynch: He moves to Merrill Lynch and champions the then-fledgling business of derivatives. He has a vision of Merrill Lynch dominating Wall Street via specializing in derivatives.
• Bill Broeksmit's Background: Broeksmit's upbringing in a minister's family is described, highlighting his intelligence, his interest in finance, and his struggles with personal demons.
• Broeksmit's Expertise in Derivatives: Broeksmit's talent for understanding and structuring complex financial instruments, particularly derivatives, is emphasized. He quickly gains a reputation as an innovator.
• Partnership: He accepts a job offer from Edson and his wife. They relocate to Short Hills and begins working alongside Mitchell.
• The two rise: Mitchell and Broeksmit are portrayed as complementary figures. Mitchell has a frenetic energy while Broeksmit is cerebral.
• Continental Illinois Failure: Continental Illinois fails and Edson comes knocking.

In essence, Chapter 2 lays the groundwork for the story of Deutsche Bank's transformation by introducing the two men who would drive that change, highlighting their respective backgrounds, talents, and the circumstances that led them to join forces.

Chapter 3, "Wall Street's Great Migration,"
details the events leading to Edson Mitchell's move to Deutsche Bank and the subsequent recruitment of key personnel from Merrill Lynch. Here's a summary:

• Deutsche Bank's Underperformance: Deutsche Bank's leadership, particularly Hilmar Kopper, recognizes the bank's weakness in investment banking compared to its Wall Street rivals. The acquisition of Morgan Grenfell had been underwhelming, and the bank needed a major catalyst for change.

• Mitchell's Opportunity: Edson Mitchell, having achieved success at Merrill Lynch, is approached by Deutsche Bank to lead their global markets division.

• Recruitment: Bob Flohr approaches Mitchell on behalf of Deutsche Bank and asks if Mitchell would be interested.

• Merrill's Reaction: Aware of Mitchell's plans, Merrill Lynch offers him more money and autonomy, but Mitchell ultimately decides to move to Deutsche Bank.

• The Exodus: Mitchell successfully recruits several key executives from Merrill Lynch, including Michael Philipp, Anshu Jain, and Grant Kvalheim, to join him at Deutsche Bank. This marks the beginning of a significant "migration" of talent from Wall Street to the German bank.

• Broeksmit's Hesitation: Although Mitchell tries to recruit Bill Broeksmit, he initially declines, feeling a sense of loyalty to Merrill Lynch and a desire to spend more time with his family. However, he eventually agrees to join Deutsche Bank after being persuaded by Mitchell and the lucrative offer.

In essence, Chapter 3 describes the strategic shift at Deutsche Bank and the key personnel changes that would drive its ambitious expansion into global financial markets, setting the stage for the conflicts and challenges that would follow.

Chapter  4

Chapter 4, "Forces of Darkness," details the cultural clashes and internal power struggles that arose within Deutsche Bank following the influx of American executives and the bank's push into global investment banking. Here's a summary:

• Cultural Clashes: The arrival of American executives like Edson Mitchell leads to clashes with the bank's traditional German culture. The Americans find the bank's hierarchy and consensus-driven decision-making slow and frustrating.
• Forces of Darkness: Mitchell and his crew nickname the German executives who resist change "the Forces of Darkness," highlighting the growing divide within the bank.
• Power Shift: Mitchell demands more control over the markets business, leading to a centralization of power in London and further marginalizing the German executives.
• Success and Expansion: Despite the internal conflicts, Deutsche Bank's profits and influence continue to grow under Mitchell's leadership. The bank's "off-site retreats" and high compensation packages attract talent and fuel its expansion.
• Building an Army: The goal of expanding Deutsche's influence results in large bonuses, muscle-bound shoeshine guys, and parties.
• Risks and Concerns: Concerns arise about the bank's expanding portfolio of derivatives, with some executives questioning the risks involved and the potential for conflicts of interest. Mitchell and his underlings become known as bloodthirsty piranhas.
• Mitchell's Personal Life: Mitchell drifts apart from his family and begins a relationship with Estelle, a French interior designer, leading to further changes in his behavior and priorities. This foreshadows future recklessness.

In essence, Chapter 4 explores the internal tensions and cultural shifts that shaped Deutsche Bank's identity during its period of rapid growth, setting the stage for the conflicts and challenges that would arise as the bank's pursuit of profits intensified.