The following is the unofficial transcript of a CNBC interview with Deutsche Bank Americas CEO Seth Waugh on CNBC's "Squawk on the Street" today at 9:30 AM ET. All references must be sourced to CNBC.
In the CNBC exclusive interview, Waugh discusses Deutsche Bank subprime, the credit crunch and the market's volatility, among other topics:
Erin Burnett: Deutsche Bank, are down nearly 6% over the past month but it is a whole lot better than a number of competitors. We have to be fair here. Is the worse of the credit contagion behind us or lurking around the next corner? Joining us is Chief Executive Officer of Deutsche Bank Americas Seth Waugh. After we managed to extricate you from the Tiger crowd down there; right?
Seth Waugh: It was fun.
Erin: It was very fun. Let me first of all ask you about the credit situation. I mean would you say over the past 30 days it has -- right now is it better than it was a week ago?
Waugh: It is definitely better. I wouldn't say it was back to normality. It is a little confusing too. You have a lot of changes going on in the market a lot of repricing as well as the fact it is last week of august which is normally sort of a quiet period anyway. Yesterday felt frankly like the first day of summer in terms of how quiet and reserved it was obviously we'll see what happens today. To refer it to a credit crunch I think is -- obviously that's a bit of what's going on. But really it started with an asset problem right in the form of sub prime which has caused contagion to some other things in the marketplace, but there really isn't -- you know, there isn't a classic credit problem in a sense that, you know, companies are actually -- earnings are good and we feel as though, you know, there's not a -- there's no defaults that are necessarily going on. We did end up with a liquidity crisis, which was as a result of --
Mark Haines: That was your fault, wasn't it? Wasn't it the banker's fault?
Waugh: Well, I think it is the -- any time there's a repricing in the market and there's stress put on the market, you are going to find the stress points; right? I think really what happened is there was a fear of the unknown, and so what people -- there wasn't -- what is a triple a anymore; right? What does that mean? And so you had a flight -- or a fear of general panic of -- panic is probably too strong but a general aversion to lending because of the uncertainty of what was behind certain assets.
Mark: First, what is the commercial paper market look like now? Because my opinion that was the bullet lodged near the spine.
Waugh: I agree with that. I agree with that completely. That's where the fed acted last week; right? Because we went from a fairly, you know, contained sort of small part of the market into something that was much broader. Suddenly companies that had nothing to do with sub prime were having a bit of a problem financing, and you suddenly are talking about some, you know, potentially large failures in the marketplace and other things like that.