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In other words, the contagion Deutsche Bank is spreading is all about the opaque derivatives that the Federal Reserve and Congress have failed to meaningfully reform. President Obama has also failed the American people in this regard -- even going so far as to misinform the public on the derivatives issue in a press conference on March 7 of this year.

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The standards for determining whether a piece of information is material differ somewhat depending on the regulator involved. And some regulators are considering changes in existing standards around what is material information. In short, it is something of a gray area.

Generally speaking, materiality depends on whether a reasonable investor would consider the information important enough to affect the investor's decision to buy a company's securities.

Many companies and investors use a rule of thumb that something has to make up at least a specific portion of the company's business to be considered material--10% of revenues, for instance, or 5% of earnings. But companies are supposed to go beyond the numbers and consider "qualitative" factors as well.

The administration's efforts reflect the partisan thorns that still surround the sprawling law a half-dozen years after its passage. The payouts that officials want to salvage were part of an ACA strategy to help the marketplaces flourish early on. But Republican opponents in Congress branded them an insurance industry "bailout" and restricted the use of HHS funds.

A settlement probably would rely on Treasury's Judgment Fund, a 1950s creation that is allowed as much money as it needs to satisfy valid claims against the government. The fund's website shows that it has been used for a few hundred claims against HHS in the past decade. Taken together, they amounted to about $18 million -- a fraction of what the insurers are owed.

In the administration's waning months, officials are continuing their upbeat portrayal of all aspects of the law. Behind the scenes, they think that making these payments to insurers -- $2.5 billion for 2014 and an as-yet-undisclosed sum for 2015 -- is crucial to the exchanges' well-being.

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"The amount would be very good news, below what consensus expects now," said Jerome Legras, an investor at Axiom Alternative Investments, who holds a short position on the lender. "Deutsche Bank has dropped so much as there is so much speculation circulating -- at some point people just want to make a profit on short positions."

The bank said its decision to cut almost one in five of its employees worldwide and merge two of its largest businesses will result in a €700m write-off and a loss for this quarter.

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Commerzbank also warned that "ongoing weakness in the shipping markets" would push up its loan loss provisions in the coming months. The bank decided four years ago to exit the ship financing business but still has about €8bn on its books.

"They're going to probably have to say that they would be willing to put funds into the bank," said banking analyst Christopher Whalen, senior managing director and head of research at Kroll Bond Rating Agency. "It's exactly like what (former Treasury Secretary Henry) Paulson did with Citi ... It's a very analogous situation. Hopefully, the German government will take a page from that particular book and look at how the U.S. responded."'

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However, the European corporate culture is different, particularly when it comes to banking. Bailouts are considered anathema, and German officials in recent days have signaled an unwillingness to step in.

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"The politicians in Germany aren't in position right now to do anything ahead of the election," he added. "The beast in the market, the serpent in the market, knows this, and the market will push and push and push until they break the politicians in Germany to come up with public funds."

Federal authorities are punishing the San Francisco-based lender for as many as 413 alleged violations of the Servicemembers Civil Relief Act, according to a statement Thursday from the Justice Department, which said the bank agreed to pay more than $4 million to compensate borrowers involved in unlawful repossessions spread over seven years. The bank's regulator, the Office of the Comptroller of the Currency, also fined the company $20 million for a decade of transgressions, the agency said in a statement.

About 10 funds that use Deutsche's prime brokerage business -- a division that services hedge funds - are believed to have reduced their positions with the bank in recent days by shifting some of their derivatives holdings to different firms and withdrawing some cash.

See also Martin Armstrong's comments.

Inquiring minds wonder if this abrupt about-face is actually in direct response to/retaliation for the 9/11 liability legislation. Those who predicted that the legislation might herald the death of the petrodollar certainly have a giant factual point in their favor already, after a mere few hours.

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In fact, in the Dallas market, the ratio of home prices to income actually exceeds the level it was at during the previous housing boom. So, relative to income levels, home prices are becoming EXTREMELY expensive. This means that home prices are passing their all-time highs on both a relative AND absolute basis.

The suspension, in effect immediately, will remain in place for 12 months, State Treasurer John Chiang said Wednesday. "Complete and permanent severance" between his office and the bank will occur if it doesn't change its practices, he said. The treasurer is also suspending his office's investment in Wells Fargo securities.

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"There are still dozens of unanswered questions," Senator Sherrod Brown of Ohio, the banking committee's top Democrat, said in a statement. "We still don't know how many customers were harmed and how long this fraud continued."

The news about executives forgoing pay and the board's review won't affect the House Financial Service Committee's investigation into Wells Fargo, said a spokesman for Chairman Jeb Hensarling, a Texas Republican.

"I would have to consult my counsel, I'm not aware that that's a conflict," Yellen said in testimony to the House Financial Services Committee in Washington, while rejecting Garrett's suggestion that the U.S. central bank has a political bias.

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The heated exchange came during a week when the Fed has been under fire for its politics: Republican Presidential nominee Donald Trump said that the Fed is keeping rates low to make President Barack Obama look good during a widely-viewed televised debate on Monday. Merited or not, the persistent questioning of the Fed's objectivity -- and Yellen's inability to deflect that skepticism -- could become a headache for the officially non-partisan and independent central bank.