WEBVTT - Wall St Nemesis Joins House Panel Deutsche Bank Probe

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcasts. A Wall Street

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<v Speaker 1>nemesis is joining the House Financial Services Committees investigation of

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<v Speaker 1>Deutsche Bank. His name is Bob Broach and he spent

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<v Speaker 1>more than twenty years with the Senate's Permanent Subcommittee on Investigations.

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<v Speaker 1>Joining me is Greg Farrell, Bloomberg News legal reporter. Greg

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<v Speaker 1>tell us a little bit about his personality, obviously, his

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<v Speaker 1>prosecutor personality and his investigation style. Well, first of all,

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<v Speaker 1>he's not a prosecutor. He's an investigator. He's very deliberate.

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<v Speaker 1>He's actually um very much a plane. Uh, he doesn't

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<v Speaker 1>stick out. If he didn't, you know, if it didn't

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<v Speaker 1>have this type of job, I'm not sure you would

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<v Speaker 1>have heard of me. He's not a flamboyant guy. He

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<v Speaker 1>does not call attention to himself, but he's very deliberate.

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<v Speaker 1>He's almost a nerd when it comes to pouring over

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<v Speaker 1>documents and being very thorough about whatever the subject he's done,

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<v Speaker 1>and based on his track record, I think he's quite

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<v Speaker 1>skeptical of a lot of big banks, and you know

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<v Speaker 1>their ability to comply with the law. You need a

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<v Speaker 1>nerd for this kind of investigation. Tell us about some

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<v Speaker 1>of his past investigations for the Senate. Well, the first

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<v Speaker 1>time I came across him was on Planet Enron, which

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<v Speaker 1>I covered in a previous life many years ago, and

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<v Speaker 1>I went to hear the presentation that the Senate Permanent

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<v Speaker 1>p s I, the Permanent Subcommittee on Investigations, had done

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<v Speaker 1>on loans from JP Morgan Chase and City Group to Enron,

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<v Speaker 1>and I, if I recall correctly because it was many

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<v Speaker 1>years ago, the substance of that was that Enron borrowed

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<v Speaker 1>money but then claimed it put it on its income

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<v Speaker 1>statement as revenue as opposed to debt, or it's bound

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<v Speaker 1>and revenue as opposed to debt. A big no no.

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<v Speaker 1>And the bank's basically allowed this to happen or didn't,

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<v Speaker 1>even though it seemed that they should have known. And

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<v Speaker 1>it was quite a thorough impressive investigation. Other people, including

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<v Speaker 1>the Manhattan District Attorney, also glommed onto this um and

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<v Speaker 1>you could tell this guy was driven by trying to

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<v Speaker 1>find you know, what had actually happened, as opposed to

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<v Speaker 1>back then there was a lot of Uh, there was

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<v Speaker 1>a circus light atmosphere, particularly among Democrats in Washington, regarding

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<v Speaker 1>ken Lay and ken Lay's relationship with President George W.

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<v Speaker 1>Bush and his father. Roach did not play in that

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<v Speaker 1>game at all. He was just very specific about these loans. Uh.

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<v Speaker 1>The the bad guy, if you will, on those deals

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<v Speaker 1>were the big banks, and he was there to castigate

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<v Speaker 1>them for, you know, basically entering into these deals without

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<v Speaker 1>you know, doing their own due diligence. I covered the

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<v Speaker 1>trial and the circus like atmosphere continued throughout. Now he's

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<v Speaker 1>already investigate as you mentioned banks and Deutsche Bank. What

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<v Speaker 1>is the committee planning to investigate here? Do we know

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<v Speaker 1>what their investigation will be focusing on? Only what Adam

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<v Speaker 1>Schiff had said last week. It's one of the few

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<v Speaker 1>public statements he and Congresswoman Waters have made, is that

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<v Speaker 1>they will be looking into basically personal not personal business deals,

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<v Speaker 1>but business deals between the Trump organization and Russia and

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<v Speaker 1>looking for any threads from Russia that tie into Trump

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<v Speaker 1>as candidate, Trump as real estate developer. Uh. License or etcetera. Um,

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<v Speaker 1>that was Shift statement. I think, um, you know, Congressman

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<v Speaker 1>Waters is being careful. She sent out a series of

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<v Speaker 1>letters when she was in the minority two years ago

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<v Speaker 1>that went nowhere. She she asked Deutsche Bank for you know,

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<v Speaker 1>information about client, you know, Donald J. Trump, for a

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<v Speaker 1>couple of loans that the bank had extended in for

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<v Speaker 1>the Post Office hotel in Washington, UHD Rale golf course

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<v Speaker 1>in Florida, as well as the Chicago Tower, and because

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<v Speaker 1>she didn't have the power of subpoena, the bank did

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<v Speaker 1>not have to respond. Um. She then sent a few

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<v Speaker 1>subsequent letters basically trying to push the Republican chairman of

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<v Speaker 1>the committee to do something, and then push the House

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<v Speaker 1>to do something, and that didn't go anywhere. I think

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<v Speaker 1>she wants to be very careful here. I think she

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<v Speaker 1>and Adam Shift realized that, um, this can't be just

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<v Speaker 1>an open ended fishing trip. That will be a poor

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<v Speaker 1>use of time in the next six to nine months,

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<v Speaker 1>and then presidential election season is on next year. So

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<v Speaker 1>I think she wants to be strategic and bring roach

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<v Speaker 1>in will help with that effort. I think the question

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<v Speaker 1>is how much patient patients she and Schiff have. I

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<v Speaker 1>think they want to show some results during this calendar

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<v Speaker 1>year and not have something come out, you know, a

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<v Speaker 1>year from now. She was particularly criticized and picked on

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<v Speaker 1>by President Trump. Um. And so do you think that

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<v Speaker 1>partisanship will end to into this at some point? So

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<v Speaker 1>they say it won't. I think that's a balancing a

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<v Speaker 1>fine line and a balancing act for her because she

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<v Speaker 1>does not want it will not be in the interests

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<v Speaker 1>of the committee for her to appear to be partisan.

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<v Speaker 1>So um. And, like I say, I think so far

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<v Speaker 1>that's the you know, the the line she's taken. The

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<v Speaker 1>President has been very successful at baiting some of his

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<v Speaker 1>enemies into responses, bating some of his enemies into doing

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<v Speaker 1>things they wouldn't do, targeting people, and then provoking the

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<v Speaker 1>reaction that does not make them look better. And Congressman

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<v Speaker 1>Waters has so far stayed above the fray to her credit.

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<v Speaker 1>And Roach, how is he likely to handle this in

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<v Speaker 1>a nonpart bipartisan way, um, in a nonpartisan way? So um.

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<v Speaker 1>We had a good quote from a Republican named Gary

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<v Speaker 1>Brown who talked about Roach being very like nonpartisan. He

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<v Speaker 1>will go where the facts are and um, which is

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<v Speaker 1>the type of person. It basically adds to the credibility

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<v Speaker 1>of the investigation that they brought someone in who's well

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<v Speaker 1>known as a very thorough, fact based um investigator and

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<v Speaker 1>not someone who's there just to basically toss bombs, uh,

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<v Speaker 1>you know, into the news cycle every day. Now you

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<v Speaker 1>write that the committee is also looking for someone with

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<v Speaker 1>a background in investigative reporting, well that that brings up

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<v Speaker 1>a lot of ideas. It does, but I think you know,

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<v Speaker 1>the way this gets described to us, it doesn't necessarily

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<v Speaker 1>mean they're looking for an investigative reporter. I think, you know,

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<v Speaker 1>like any committee, they're going to be doing a report

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<v Speaker 1>that wants them help. What better way to look than

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<v Speaker 1>a young, aggressive reporter who can weave something together into

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<v Speaker 1>a bigger story whatever it is that they're going to write.

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<v Speaker 1>They wanted to be convincing and compelling and make people

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<v Speaker 1>read it, So I think I would look at it

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<v Speaker 1>that way, rather than an actual plan where they put

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<v Speaker 1>a help wanted sign out for an investigative reporter. They

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<v Speaker 1>just want someone who's good with words and can sort

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<v Speaker 1>of see the bigger picture to be able to describe

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<v Speaker 1>this in a good way. And maybe that person is

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<v Speaker 1>on staff already be great to have a report that

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<v Speaker 1>was written in that way. Right now, just tell us

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<v Speaker 1>a little bit Deutsche Bank. We have a been a

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<v Speaker 1>minute here. Deutsche Bank has been investigated and over and over.

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<v Speaker 1>It's hard to keep tracking them. Just tell us about

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<v Speaker 1>the biggest investigations in about a minute. Well, they've been investigated.

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<v Speaker 1>They have five counting five separate monitors for various issues.

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<v Speaker 1>But the most important thing I think we should keep

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<v Speaker 1>an eye on is an investigation into uh a scandal

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<v Speaker 1>known as the mirror trading scandal that took place in

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<v Speaker 1>Russia in Moscow in over a period of several years

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<v Speaker 1>around The bank allowed some very wealthy Russians to trade

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<v Speaker 1>basically approximately more than twelve billion dollars worth buying shares

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<v Speaker 1>in Moscow and then selling them simultaneously in London, irrespective

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<v Speaker 1>of whether or not their good investments, just to get

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<v Speaker 1>many out of the country. And the UK has settled

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<v Speaker 1>with the bank over this. The New York State Banking

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<v Speaker 1>Regulator has settled with Deutsche Bank, but not the Justice Department.

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<v Speaker 1>So it would be interesting to see what happens if

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<v Speaker 1>the DJ ever does lower the hammer on Deutsche Bank

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<v Speaker 1>for that fascinating article, and you know so much about

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<v Speaker 1>financial crime. Gregg Farrell, Bloomberg mus Legal reporter. Thanks for

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<v Speaker 1>listening to the Bloomberg Law Podcast. You can subscribe and

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<v Speaker 1>listen to the show on Apple Podcasts, SoundCloud, and on

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<v Speaker 1>bloomberg dot com slash podcast. I'm June Brosso. This is

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<v Speaker 1>Bloomberg