Friday Sept 30, 2016
In a frenzy many demand their deposits in full. Of course in a fractional banking system, most deposits are loaned out with perhaps less than 10% actually held in cash.
So a demand by 10% of the deposits for return of their money can collapse a bank.
Deutsche is now facing a $14 B fine from the US over its mortgage backed involvement. And there are rumors hedge funds are moving money out of the bank.
And so bank share prices are falling around the world.
Recall that Deutsche was involved with KPMG in the sale of tax shelters back in 1999. Perhaps we have a tone at the top problem here.