And from what you say regarding what their investment involvement IS, they could still be bailed out if at some point they went to us and said plz do.

I so agree with you on the control of underlying mortgages.

The point about foreign banking institutions is critical, but it’s not clear where Deutsche Bank itself fits. In Cleveland, Deutsche Bank has never been a lender. Their name is all over the foreclosure and property records because they’ve served as “Trustee” for a large number (most?) of the investment pools created by Argent (and some other big subprime loan peddlers) to “securitize” thei mortgages. Trusteeship is probably not one of the “mortgage-based assets” Paulsen wants to buy.

On the other hand, Deutsche Bank does hold billions of dollars worth of ownership shares, or “residential mortgage-based securities” (RMBSes), in the same kind of U.S.-based investment vehicles — maybe the specific vehicles they Trustee for, but probably others as well. These RMBSes have been cratering like everybody else’s, forcing DB to take multi-billion dollar balance sheet losses. Presumably they’d love to dump them on the U.S. government.

This is one reason why I think it’s so important for Cleveland that any bailout legislation says: If you want to sell us some mortgage-based securities, you must be able to give us control over the underlying mortgages as well. Otherwise, none of the important decision-making roles will change, only who eats the losses.