That is what Josef Ackermann the CEO of Deutsche Bank said in a Bloomberg article. This is perhaps one of the first CEO’s to be honest about the situation. Of course this story was not talked about anywhere else that I saw in the media. Even though stories about unemployment benefits were prominent on CNBC and the New York Times where the government is considering lengthening the emergency unemployment insurance benefits, which they should, by another 13 weeks.
While those stories are relevant and important, the mere fact that Germany’s largest lender admits that; “The crisis is not over,” Ackermann said. “When one looks at the developments of global economic growth, then it can be expected that starting in the second half of this year we slowly move into the positive territory. But we’re still moving on a low level.”
Deutsche Bank (DB) this week set aside 1 billion euros ($1.4 billion) for risky loans in the second quarter. This is a seven-fold increase in provisions for risky loans and Mr. Ackermann also acknowledged that those banks which took government funds and which were “encouraged” to increase domestic lending may be in more danger of higher defaults than banks lending internationally.
If Germany’s largest lender, which has the capabilities to lend worldwide, is expecting more problems, sets aside more assets for defaults (as our banks did) and openly admits the crisis is not over-- then there are significant problems in the banking sector still. This is not a revelation to me, but it may be to some people who expect that a problem that took years to develop has subsided in just a few months.
I've got news for you: The problems are still there and the people paying for it are those collecting unemployment. Until those people are employed and can pay their mortgages, then the problem will persist. Especially since those people have more than likely relied on credit cards and home equity lines of credit along with other credit based lifelines. If they don’t have a job then those loans will blow up next, just like we've said would happen many times before.