Donald Trump’s newly opened hotel, a couple of blocks down Pennsylvania Avenue from the White House, was booming. The president regularly showed up there for a steak dinner or political fundraiser. A number of top administration officials—including Steven Mnuchin, now the Treasury secretary—took up residence in suites that started at more than $1,000 a night. Interest groups trying to influence federal policy hosted events in the hotel’s grand ballroom. Foreign dignitaries and their entourages, hoping to score points with the White House, booked blocks of rooms. The hotel’s Benjamin Bar and Lounge—where visitors could sip $10 draft beers in Oval Office–like splendor—became the preferred Washington hangout for the Trump crowd.
Deutsche Bank’s money had built the Trump International Hotel. And barely a month into his presidency, Trump was spending a surprising amount of time thinking about his long relationship with his loyal German bank.
Mike Offit was at the Yale Club in Manhattan for a lunch hosted by Business Executives for National Security, an organization of which he was a member. Offit and a few others were chatting with a four-star general about America’s arsenal of nuclear weapons. His iPhone buzzed. Offit knew he should ignore it, but he couldn’t resist, and he pulled it out of his pocket. He had a new email from something called EOP. Offit opened the email and saw that EOP stood for the White House Executive Office of the President. How strange, he thought. The message instructed him to open an attached PDF file. Offit touched the icon and a document appeared on his screen. It was a scanned printout of the email he had sent Trump four months earlier, advising the underdog presidential candidate to blame hedge funds for his companies’ bankruptcies. In a black Sharpie, a message was scrawled diagonally across the top of the printout. Offit instantly recognized the tall, squished handwriting: “Mike—Such a cool letter. Best wishes, Donald.”
Offit had known Trump for decades, but this was his first time communicating with a president of the United States. He got goose bumps. The most powerful man in the world had sent him a handwritten response to his half-baked email. Offit couldn’t help but wonder if the president didn’t have more important things to do with his time. What on earth had prompted him now, months after the email was sent, to read it and reply? It reminded Offit of the note he’d received nearly two decades earlier: “Thanks for all of your help—you are a great friend,” Trump had penned on the rendering of the planned Trump World Tower. The difference was that the earlier note had a clear purpose: to reward Offit for arranging a loan and to encourage him to do it again.
“Look at this!” Offit exclaimed to the general. “I just got a note from the president!”
“What do you mean, you got a note from the president?”
Offit handed him the phone so he could see for himself. The general’s eyes widened. “Wow,” he said. “That’s more of a response than we can get out of him.” The general asked what Offit’s relationship was with the president. “I loaned him half a billion dollars,” Offit crowed.
That was on February 21, 2017. One week later, on a warm, rainy evening in Washington, the presidential motorcade pulled up at the Capitol for Trump’s first address to a joint session of Congress. In contrast to his hell-raising “American carnage” inaugural oration a month earlier, this speech was calm and conciliatory. Trump had hewed, more or less, to the teleprompter text and had sounded, more or less, like a normal Republican. (Back at the White House that night, relieved aides would give him a standing ovation.) After stepping down from the lectern, Trump shook hands with the dignitaries in the audience. In the front row were the Supreme Court justices. Trump moved down the line until he got to Anthony Kennedy. As Trump pumped the justice’s hand, Kennedy congratulated him on a successful speech. “Very nice, thank you,” Trump replied. “Say hello to your boy,” he added, patting the justice’s arm. “Special guy.”
The eighty-year-old justice was tickled to hear the president praising his son and remembering the help that Justin Kennedy had provided years earlier to finance Trump projects that no other banks would touch and that even within Deutsche had been deeply controversial. That help had continued even after Kennedy left Deutsche; he had his own finance and real estate firm and had worked with other members of the Trump family, including Kushner. (Kennedy in 2011 helped restructure the overwhelming debt that the Kushner Companies had on their flagship skyscraper at 666 Fifth Avenue in Manhattan. That same year, coincidentally or not, Kennedy landed for the first time on a list of the hundred most powerful people in New York real estate—a ranking published by Kushner’s New York Observer.) And he regularly socialized with Don Jr. and Ivanka Trump.
“Your kids have been very nice to him,” Justice Kennedy said to the president.
“Well, they love him, and they love him in New York,” Trump cooed. “He’s a great guy.” The president turned to the chief justice, John Roberts. “You’ve got a good guy,” he said, gesturing at Kennedy.
Justin Kennedy was at home, watching Trump’s speech on TV. This veteran financier, so accustomed to rubbing shoulders with the rich and famous, watched as Trump shook his father’s hand and exchanged pleasantries. He couldn’t help but feel impressed. Later that night, he called his father. “What did he say?” Justin asked.
“He says hi to you!” the proud father exclaimed.
Trump’s flattery was part of a coordinated White House charm offensive designed to persuade the aging justice—for years, the court’s pivotal swing vote—that it was safe to retire, even with an unpredictable man in the Oval Office. Milking the family connection via Deutsche Bank—whose offices the elder Kennedy had repeatedly visited over the years—was a central part of the strategy. For a notoriously dysfunctional White House, this was a rare instance of savvy scheming. The campaigning had begun weeks earlier, at an inaugural lunch in the Capitol, when Ivanka was seated beside Justice Kennedy. She had talked his ear off about her great relationship with Justin. She described how they first got to know each other in 2005 when Deutsche made the big loan to finance the Chicago skyscraper that Ivanka was in charge of, and how it had only grown deeper in the ensuing years. Afterward, Justice Kennedy invited her to visit the Supreme Court as a VIP guest. A few weeks later (two days after the White House emailed Offit), Ivanka showed up at the Supreme Court with her five-year-old daughter to hear a case about arbitration agreements. The next month, Justin Kennedy and his brother were guests at the White House’s Saint Patrick’s Day celebration.
In June 2018, Anthony Kennedy announced his retirement. Trump now had the opportunity to nominate his second Supreme Court justice* and to fundamentally alter the high court’s composition. The prospect of tipping the balance in a decisive conservative direction ensured that any Republicans who were losing confidence in their party’s unconventional president now reaffirmed their commitment to the success of the Trump administration. On the Saturday in October 2018 when Brett Kavanaugh was sworn in, Kennedy was there to witness the occasion.
Deutsche Bank in previous decades had helped stabilize Trump’s floundering business. Now—indirectly, through past relationships and loans—it had helped stabilize his floundering presidency.
After leaving Zurich Insurance in shame, having been blamed for his colleague’s suicide, Joe Ackermann had been expected to fade into retirement. But in 2014 he got a call about a job opportunity in Cyprus. The Mediterranean island’s banks had been decimated by their reckless lending, as well as by the country’s economic crisis. Some prominent financiers now were looking for bargain-basement acquisitions. The country’s largest lender, the Bank of Cyprus, soon got new owners: Wilbur Ross, an American investor and Trump’s future Commerce secretary, and Viktor Vekselberg, a Russian oligarch with ties to the Kremlin. Ross and Vekselberg drew up a short list of candidates to run the place, and Ackermann was their choice to be chairman. Ackermann—such a Russophile that he had entertained Putin’s offer to run the Kremlin’s investment fund—was impressed by Vekselberg’s credentials and convinced himself that the Russian was a good, honest man. (The United States imposed sanctions on Vekselberg and his company in 2018.) Ackermann took the job.
Even after the collapse of its economy and financial system, Cyprus had remained a portal for Russians to launder money into the European Union and the eurozone. That scared many big banks away from doing business there. Not Deutsche. It continued to help Bank of Cyprus, with Ackermann now at the helm, convert foreign currencies into dollars and euros—a crucial cog in any international money-laundering machine. The Bank of Cyprus relationship lasted into at least 2015—and Deutsche’s Cypriot work in general lasted much longer. Well into Trump’s presidency, employees in Deutsche’s anti-money-laundering offices in Florida would be flagging suspicious transactions their bank was doing on behalf of various Cypriot lenders. Ackermann was long gone from Deutsche, but here was one more sign of his lingering legacy.
Deutsche was beginning to look like a zombie. It had been losing money for years. Tens of billions of dollars of derivatives—likely representing billions of dollars of fresh losses—continued to pollute its balance sheet. The bank’s shares were at their lowest level since they debuted on the New York Stock Exchange shortly after 9/11, and they were down 92 percent from their 2007 peak. Investors, regulators, and even some of the bank’s senior executives had fundamental doubts about the institution’s viability.
A few months earlier, just days before Trump was sworn in as president, the Obama administration’s Justice Department pummeled Deutsche Bank with a $7 billion penalty—among the largest fines ever imposed on a bank—for ripping off investors and borrowers through its fraudulent sale of mortgage-backed securities. A parade of federal prosecutors and politicians blasted the bank and its traders and executives for their recklessness and greed. Deutsche’s acquisition of MortgageIT, including the destructive manner in which its production was revved up just as the mortgage market was melting down, was a key element of the case. The settlement agreement quoted extensively from internal emails and chat messages in which Deutsche traders, supervisors, and salesmen candidly acknowledged that they were tricking investors and misleading customers. Most of the misconduct was a decade old, and plenty of other banks had engaged in similar behavior, but the enormous financial penalty further drained Deutsche’s drying well of capital.
And more problems loomed. In early 2017, shortly after Trump’s inauguration, British and German journalists had emailed the bank’s public relations department and informed them that they were writing a story about a previously undisclosed Russian money-laundering scheme involving the bank—the sprawling Laundromat operation. This was the first that senior Deutsche executives had heard of this about-to-erupt scandal. Weary bank officials started investigating. They soon realized that Deutsche had been moving money—as much as $80 billion—for thousands of “high-risk entities” in various countries. An internal presentation to the supervisory board concluded that the scheme exposed the bank’s senior executives to potentially severe government penalties.
To employees, the eras of Ackermann and Jain had become parables for the perils of growing too fast, pursuing profits above all else, not caring about clients’ integrity, not taking the time to integrate businesses. Deutsche still had a tangled nest of more than a hundred different internal technology systems that didn’t interact properly—and that was after the bank had managed to cut the number by more than half. There was something like fifty petabytes—each petabyte being a million gigabytes—of incompatible data crammed into various computer servers around the company. “You don’t even know where the problems are or where to start,” confessed an employee tasked with cleaning up the mess. “Regulators tell us, ‘What you’ve got is the skeleton of a child in the body of an adult.’ ”
Gallows humor became the order of the day. Some employees noted that the bank’s blue-slash logo resembled a falling domino. Conspiracy theories about Bill’s suicide blossomed. A popular one held that he had wanted to come clean about high-level malfeasance but was warned he would be thrown under the bus, personally paying the price for the bank’s sins. Memories of Edson Mitchell had all but vanished. “He is forgotten,” said one mid-level employee, who had heard rumors of his “racy lifestyle” but was pretty sure his name was “Edsall.”
Back in Jacksonville, Deutsche’s anti-money-laundering watchdogs were reaching the breaking point. They’d been chafing for years under a succession of regional executives whom many staff members perceived as imperious and incompetent. More than a few compliance officers—trained at other financial institutions to view themselves as a crucial shield against financial crime—quit in frustration at what they saw as Deutsche’s haphazard setup, in which employees were incentivized to churn through transactions as quickly as possible, with little regard for the potential problems they uncovered. (One employee would recount how she was instructed to stop highlighting transactions involving companies exposed in the massive leak known as the Panama Papers. Another was told to pipe down when protesting a transaction in which money was wired to a prominent sanctioned Russian.) Now, as Deutsche swiveled between trying to cut costs and trying to beef up its compliance programs, longtime staffers watched with dismay as the bank brought in hundreds of outside consultants—many of them young and inexperienced, all of them cheaper than full-time employees—to supplement the anti-money-laundering workforce. With the influx of rookie newcomers, veteran managers couldn’t shake the feeling that they were being set up to fail.
There was one elite arm of the anti-money-laundering squad that seemed to be doing all right. It was called the Special Investigations Unit, and it consisted in part of former police and military officials who were considered the best of the best in their field. Their job was to review the most complicated and sensitive transactions. Starting in 2017, that assignment included anything associated with the new president and his dozens of legal entities. When some of those accounts—including the one belonging to the Donald J. Trump Foundation, soon to be shut down after New York prosecutors accused it of operating as a political slush fund—started moving money outside the United States, the investigations group took a look. Employees concluded the transactions were suspicious enough that they should be reported to the government. As had happened with Tammy McFadden the prior year, suspicious activity reports were created, sent up the ladder for approval—and then dismissed. Deutsche officials denied it, but it was hard to avoid the impression that bank higher-ups were going to bat for their most powerful customer.
On December 4, 2017, a German newspaper reported that Robert Mueller, the special counsel investigating Russia’s interference in the presidential election, had subpoenaed Deutsche, demanding records related to its relationship with Trump. Within hours, a number of American news organizations had published their own stories, with anonymous sources confirming that Mueller’s office had issued the subpoenas. Trump woke up that morning, scanned the headlines on his phone, saw the news about the subpoena, and exploded. “I know my relationships with Deutsche Bank,” the president barked at his lawyer, John Dowd, in a seven A.M. phone call. “I’m telling you, this is bullshit!” Dowd organized a phone call with Mueller’s team. One of the prosecutors assured Dowd that the news reports had been wrong; Mueller’s team hadn’t subpoenaed Deutsche for Trump’s records. (It turned out that the special counsel had subpoenaed Deutsche for the records of Paul Manafort, Trump’s onetime campaign manager.) Word of Trump’s fury circulated around Washington. To any government official paying attention, this was a powerful signal: Investigate Deutsche and risk the president’s wrath.
For the bank, this was a thick silver lining to the ominous cloud of Trump. And here was another: The Trump administration was rapidly relaxing government regulations designed to hem in Wall Street. The Consumer Financial Protection Bureau was neutered. Joseph Otting, who had previously worked for Steven Mnuchin, was installed atop the Office of the Comptroller of the Currency, a powerful federal regulator, and promptly loosened the reins on the country’s biggest banks. Advocates of tough industry oversight exited the Federal Reserve. The administration watered down the Volcker Rule, which restricted banks from engaging in so-called proprietary trading—what had been Deutsche’s lifeblood. At the very end of 2017, the Labor Department disclosed in the Federal Register that it was cutting a break to Deutsche and four other banks that had admitted to criminal misconduct in their manipulation of interest rates. Under federal law, companies that are convicted of violating securities laws aren’t allowed to manage employees’ retirement plans unless they get a waiver from the Labor Department. Now, in a manner that seemed crafted to minimize public attention, the Trump administration granted multiyear waivers.
This was all good news in Frankfurt, but the Justice Department’s investigation into Deutsche laundering money for Putin’s associates via the mirror trades still loomed. (Deutsche’s previous civil settlements with American and British regulators didn’t affect the criminal investigation.) In the final months of the Obama administration, all signs had pointed to charges soon being filed against bank employees and probably the bank itself. At the very least, a multibillion-dollar financial penalty looked all but certain.
Something curious, however, had happened as soon as Trump took the oath of office. The investigation had gone silent. Week after week, Deutsche’s lawyers and executives wondered when they would get an update. At first they worried that the delay spelled trouble. Perhaps, after campaigning as a populist, after vowing that he was “not going to let Wall Street get away with murder,” Trump planned an aggressive crackdown on banking malfeasance. Perhaps, after having his election victory tarnished by Russian interference, Trump would try to dispel those suspicions with a high-profile assault on Russian money laundering.
But as months passed, and nothing happened, executives’ fears faded. One source of relief was the realization that two of the Justice Department’s most powerful prosecutors, Geoffrey Berman and Robert Khuzami, both had previously represented Deutsche. Berman, whom Trump had appointed as the U.S. Attorney for the Southern District of New York, had defended the bank and its employees in tax-evasion cases. Khuzami had been one of Dick Walker’s first hires at Deutsche back in 2002 and later had become its top internal lawyer and later still represented the bank when he worked at an outside law firm—and now he was Berman’s second-in-command. It was the old revolving door that had allowed Deutsche (and plenty of its peers) to co-opt its pursuers by hiring them, except that now it was happening in reverse. These two men were among those deciding Deutsche’s fate.*
Bank executives soon concluded that Russia was off-limits, too hot to handle, for the Trump administration. So, it seemed, was Deutsche.
Paul Achleitner, the bank’s chairman, was on a two-week vacation in the Peruvian Andes when the news broke that he had been secretly trying to replace John Cryan as CEO. Cryan had known Achleitner was getting antsy—the pace of improvement on his watch was sluggish at best, and the bank’s recent warnings that its finances remained weak had further shellacked its stock price—but he hadn’t realized his job was in imminent peril. Achleitner had canvassed top executives at banks like Goldman Sachs to gauge their interest in the job, a tactic virtually guaranteed to leak to the media. Within hours of the publication of articles about Achleitner searching for a new CEO, the bank was engulfed in a leadership crisis.
Achleitner cut short his vacation—Machu Picchu would have to wait—and accelerated his hunt for a new CEO. This was his second time in three years replacing the bank’s leaders. One candidate after another rebuffed him; the top job at Deutsche seemed like a poisoned chalice. Meanwhile, the bank’s board of directors very much preferred someone who could steer their German bank back to the simple things that it had been good at before a parade of CEOs had chased Wall Street riches.
There were a few senior executives currently at the bank who fit that mold, and a leading contender soon emerged. He was German, a Deutsche lifer, someone who’d been at the bank basically since high school. He had worked in different parts of the company, including retail banking and the legal department, as well as on three continents. He was forty-eight years old, with a boyish face and spiky hair.
On April 8, Achleitner unveiled the bank’s new CEO. It was Christian Sewing—the same man who had warned decades earlier about Deutsche forgetting its heritage, the same man who had nixed the final Trump loan, the same man who had presented what looked like a whitewash about the investigation into Bill Broeksmit’s suicide. Now he would be running the entire company.
Sewing was surprised by what the new gig entailed. This was a company with more than 90,000 employees—even as the bank’s finances crumbled, Deutsche had managed to expand its workforce by some 12,000 employees over the past decade—yet investors and journalists tended to view the bank through a CEO-centric prism. Everything that happened at Deutsche would henceforth be framed as a success or failure of Sewing. Everything he did or said was scrutinized and could be dredged up months later to undermine a decision he made or an action the bank took. The smallest slip of his tongue had the potential to anger one constituency or another: investors or colleagues or union members or a particular journalist or German regulators or American regulators or the president of the United States. It was unnerving.
A year into the job, Sewing remained healthy and fit—nearing fifty, he still had the taut body of a high-caliber tennis player. But deep creases lined his forehead. His once-spiky hair drooped, thinned, and grayed. His face looked weathered, the boyish sheen scraped away. The job was hard. There were no attractive answers about how to clean up the bank’s many messes or how the company might make money in the future. The bank’s largest shareholders for the past few years—predating Sewing—included Qatar’s royal family,* a shadowy Chinese conglomerate, and the American private equity firm Cerberus. These investors were not patient.
Nor, it turned out, was the German government. Senior officials in Berlin doubted the bank’s viability. It didn’t have a clear identity or direction. The threat of having to bail out this monstrously large institution was omnipresent. Leading politicians pushed Sewing and Achleitner to consider radical changes—including, on the eve of the bank’s 150th anniversary, merging with another troubled German lender, Commerzbank. Sewing didn’t want to be the one responsible for bringing the curtain down on what once had been a proud national icon, but he didn’t see much of a choice. The combined companies would still be called Deutsche Bank, but it would be a fundamentally different institution—as if the clocks had been turned back to a time before the bank’s plunge into Wall Street. Negotiations between Deutsche, Commerzbank, and the German government dragged on for months, only to unravel when all parties concluded that merging two bad banks wasn’t as likely to create one healthy bank as it was to result in a single very sick one. Deutsche Bank would have to go it alone.
As weeks passed, it became clear how treacherous that solitary path would be. The bank’s shares sank to their lowest levels ever—down 95 percent from their 2007 apex. Employees bailed. So did customers, including loyal ones like the hedge fund Renaissance Technologies, which had remained one of Deutsche’s biggest clients even after the companies’ tax-avoiding scheme was brought to light. Now Renaissance started pulling money out of its accounts—a sign of just how nervous everyone was about Deutsche’s solvency. Sewing and Achleitner scrambled to devise a plan that would prove to investors, customers, employees, and regulators that this crippled bank had the capacity to recover, albeit in a much smaller form.
After endless media and market speculation, the plan was unveiled on a pleasant Sunday afternoon in July 2019. It called for Deutsche to exit most of its remaining sales-and-trading businesses—the heart and soul of the Wall Street juggernaut that Edson Mitchell and Anshu Jain and Bill Broeksmit had constructed. Tens of billions of dollars of unwanted assets—many of them the derivatives that for years had been unnerving investors and regulators—would be disposed of. Some 18,000 jobs would disappear, representing about 20 percent of Deutsche’s workforce. A number of top executives—including the head of the investment-banking business and the head of regulatory affairs—were shown the door. The goal was to weed out anything that wasn’t related to helping German individuals and European companies do business at home and abroad. The hope was that this would turn out to be at least modestly profitable.
It was Sewing’s third and presumably final stab at crafting a recovery plan for the bank he had joined as a teenager thirty years earlier. Back in 2004, in the midst of Deutsche’s anarchic stampede for short-term profits, he had complained to Hugo Bänziger that the bank was forgetting its heritage—and then resigned when his concerns fell on deaf ears. Now Sewing framed his vision for the company’s future in nostalgic terms.
“We lost our compass in the last two decades,” he confessed. “It is my personal purpose to connect this bank with what it used to be.” Given Deutsche’s ugly past, that didn’t inspire much confidence in the bank’s future.