It’s kind of a cheap shot to go back and rehash corporate statements from way back in the past. Still, when the topic is banking and why the monetary system refuses more than intermittent and minor progress, it’s worth the revisit. What’s different now than before 2008, really August 2007, is far more than regulation. It’s the attitude that’s changed.
On August 1, 2007, Dr. Josef Ackermann, Chairman of the Board for Deutsche Bank, reported strong results for the firm. This was eight days before all hell broke loose.
After an excellent first quarter, we delivered another outstanding quarterly result, with significant earnings growth over the same period last year. All our business divisions contributed to this growth. As a result, we delivered a very strong first half year, clearly demonstrating the power and resilience of our platform.
Obliged to put down just a few words to reassure shareholders about all the wild stuff they were hearing in the media about toxic waste and what not, Ackermann ably dismissed any concerns with hard words.
Some areas of the credit markets may continue to experience turbulent conditions, and investors may adopt a more conservative stance toward leveraged finance. Our business model which benefits from rigorous risk management and independent control processes is structured to deliver performance also in the face of such challenges. We have consistently adopted a prudent approach to risk-taking, and the current environment is no exception.
Some might read that decade-old passage and see little more than the usual bland boilerplate. It’s easy to look at that and conclude the bank chief was almost lying, claiming the bank was safe when it wasn’t.
What he was really saying, however, was that unlike some others Deutsche Bank, in his view, took risks but they were the right ones, the bets on positions (from vanilla to exotic) that would pay off no matter what. He wasn’t denying that there were risks on his sheets, Ackermann was admitting to them. That was the hubris that defined the pre-crisis era, particularly from the Asian flu up to then. Everyone knew things could get dicey like for LTCM in 1998, but that was for somebody else to worry about. Our risks were the good risks that would always pay off because we know what we are doing.
