Press

The Fed’s been processing and clearing payments for decades. And because the Fed is independent, Mayra Rodriguez Valladares at MRV Associates said the Fed can take its time rolling the system out. “That allows them to spend a lot more time really trying to work out the kinks,” Valladares said.

“Mayra Rodriguez Valladares, principal consultant at MRV Associates, says that regulators can affect the cybersecurity protocols of banks in several ways. “Regulators can send in specialized IT and data teams to do specialty exams of banks to see how they are strengthening their controls against cyber-attacks. “They can also ask banks to increase their capital requirements for operational risk. This would make banks think twice about the attention and resources that they should allocate to cybersecurity threats. They can also fine banks as part of an enforcement action which would also make bank executives focus on how to improve operational risk management. If banks repeatedly have cybersecurity challenges, bank regulators can also close business lines which are more at risk of hacking and other types of cyber-attacks.”

“These tariff issues really do have a significant impact on multiple different kinds of financial institutions,” Valladares told Banking Dive. “But the banks that will feel the pinch more immediately are the community banks because they’re the ones that go and lend to the small [and] medium-sized companies in their respective districts. And they’re also the ones that are most affected by the agriculture sector.” Large national banks will still feel the impact from the tariffs. Bank stocks tumbled Thursday, following Trump’s tweet. But those larger institutions are more adept at managing risks, Valladares said.

“Mayra Rodriguez Valladares, managing principal at consultancy MRV Associates, said the bank will face significant administrative costs on top of writedowns from asset sales. “I think this is going to cost a lot more. I don’t see how they’re going to get away with this little expense to wind all this down,” she said. “Deutsche will have to hire external auditors to make sure everything is in order and there will be additional IT expenses.

The acquisitions “struck me as not being in the character of Deutsche Bank,” says Mayra Rodriguez Valladares, managing principal at capital markets consultancy MRV Associates. Valladares, who worked as an equity analyst at Bankers Trust around the time of the Deutsche Bank acquisition, described Bankers’ culture as one where “traders would have sold their grandmothers three times for a profit.” “It was a very aggressive transaction, and the culture of Deutsche Bank has been so different since,” she says. Expansion brought with it “an increase in operational risk exposure,” as well as a deal-chasing culture in which “internal controls start to loosen” and bankers “cut corners in terms of their due diligence,” Valladares notes. (Deutsche Bank did not return a request for comment for this article.)

“It tells you that there’s a lot of demand for these [leveraged] loans and it means that people in the whole lending chain are moving about too quickly,” said Mayra Rodríguez Valladares, a financial regulations consultant. “That exposes you to a lot of operational risk, with more errors made by people in the chain.”