Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The modern City of London had been built on the eurodollar system. Thanks to the Fed, that had survived the crisis. But the American regulators understood London’s role as the platform for some of the most extreme risks that the American banks had built up. As it was put to a congressional committee in 2012 by a senior US regulator, the United States had allowed its risks to migrate to London only for them to “come right back here, crashing to our shores.”4 Within the capacious framework of Dodd-Frank, US regulators were now sharply tightening the regulations of foreign banks in the United States and of US bank operations overseas.5 The European banks that had epitomized the connection between the City of London and Wall Street, the likes of Barclays and Deutsche, UBS and Credit Suisse, were under huge pressure. By 2015, of all the European banks that had once challenged for top rankings on Wall Street, only Deutsche Bank was still competing for a top spot in global investment banking, and that was widely seen as a sign of its desperation.6 Deutsche had no other secure business line to fall back on.