Germany’s Merkle and France’s Sarkozy are meeting today and the two agree that they don’t want banks so big that they can blackmail governments. Speculative excesses must not be repeated, Sarkozy says.
It was interesting to hear the head of Deutsche Bank in the US say on CNBC this morning that his bank was levered 35-40 times at the height of the bubble and that the Bank has done a great job of deleveraging and now has a gearing in the low-20s. Traditionally, banks have maintained 8-10 times leverage ratios.
At 40 times leverage, Deutsche was way too big to fail. At 20 times, they are still pretty darn big.
