But the settlement will likely not close the book on worries over the president-elect's close ties to the bank, which has faced a series of investigations over suspicious trading activity and market manipulation, including in Russia and across the world.
Deutsche will pay a US$3.1b penalty and agree to another US$4.1b in loan modifications and other homeowner relief over a five-year period. DOJ investigators initially requested a settlement of up to US$14b in September, triggering unease within the bank and highlighting the soon-to-be businessman-in-chief's precarious debts.
Some members of Congress and ethics advisers have already targeted Trump's debts to the bank as one of his most critical conflicts. Trump's private real-estate fortune has for nearly two decades depended on a steady flow of Deutsche loans.
Advisers have questioned whether conflicts of interest concerning what Trump owns could color his presidential policies and deal-making. But what he owes could prove just as influential, because those weighty debts aren't easily shaken off, and because the Trump family's real-estate business could rely on Deutsche funds for future work.
Congressional Democrats say they intend to target Trump's heavy obligations to the bank as a chief vulnerability during his presidency. Sen. Richard Blumenthal, D-Conn., a member of the Senate Judiciary Committee, vowed before the settlement announcement to make Deutsche a major issue during confirmation hearings for Sen. Jeff Sessions, R-Ala., Trump's attorney general-designate.
"It is becoming increasingly clear that the incoming president will be inextricably implicated in a variety of situations where his personal interests may be at odds with the nation's interest," Blumenthal said in an interview with The Washington Post this week. "Among his many potential conflicts, Deutsche Bank is Exhibit A. It is the most concerning."
Messages left with Trump representatives were not returned. In September, Alan Garten, an executive vice president of the Trump Organization, told The Post that Trump's Deutsche loans were not a conflict. "Every president takes office with prior dealings," Garten said.
DOJ investigators targeted Deutsche for allegedly selling toxic home loans and deceiving investors about their risky debts between 2005 and 2007, in the years before the financial meltdown. Other banks have faced similar penalties, including Bank of America and Goldman Sachs, the latter of which settled earlier this year for about US$5b.
Deutsche Bank said in September that Justice negotiators were seeking a budget-busting US$14b penalty, which led the bank's stock to plunge following analysts' claims that the bank was "significantly under-capitalized."
Deutsche executives and German politicians disputed speculation that the prominent bank had sought a bailout from the German government. The bank's share price has climbed 30 per cent since Trump's November 8 electoral victory.
Founded in 1870, Deutsche is now one of the world's most formidable financial institutions, with more than 20 million clients and roughly 100,000 employees across 70 countries.
Its total assets are larger than those of American mega-banks Wells Fargo and Citigroup and, in a note to employees in September, chief executive John Cryan said the bank had an "extremely comfortable buffer" of more than US$220b in reserve funds.
The Frankfurt-based bank's deep roots in Germany, where half of its employees and shareholders live and work, could also prove disconcerting for Trump in his role as U.S. head of state. In 2008, German Chancellor Angela Merkel hosted a taxpayer-funded dinner celebrating the 60th birthday of Josef Ackermann, then the bank's chief executive.
The mortgage-securities settlement will not resolve a series of other potential hurdles for the European banking giant. Deutsche is also facing inquiries from the DOJ and other countries over allegations it used so-called mirror trading to launder money on behalf of wealthy clients in Russia and other countries.
In a separate market-manipulation case, Russia's central bank said Tuesday that a Deutsche trader had made millions of dollars by buying and selling stocks under his relatives' name.
Plagued by a series of costly scandals over the last decade, Deutsche has agreed to pay billions of dollars in fines for violating international trading sanctions and conspiring to manipulate foreign exchange rates and the prices of gold and silver.
The bank last year agreed to pay a US$2.5b fine to the DOJ and international regulators over its role in a scheme to rig the London Interbank Offered Rate, or LIBOR, which is used to calculate interest payments across the globe. In June, an International Monetary Fund report said the bank was one of the biggest "contributors to systemic risks in the global banking system."
The potential for conflicts between Deutsche and Trump's presidency could influence the future of broad regulations crafted in the aftermath of the financial meltdown.
Deutsche was the first bank penalized last year, with a US$2.5m fine, under a provision of the Dodd-Frank financial-reform act aimed at tracking the trades of financial instruments known as swaps.
The bank's overhaul of its swaps-reporting system is now being overseen by Paul Atkins, a former Securities and Exchange Commission official and an influential member of the Trump transition team. Atkins has criticized Dodd-Frank and questioned the effectiveness of corporate penalties as a means to deter bad behavior.
Atkin's views on Dodd-Frank appear to align with those of Deutsche, which has paid more than US$1m since the start of 2015 to Peck Madigan Jones lobbyists targeting members of Congress, records show. Their lobbying priorities have included Dodd-Frank rules, tax reforms and issues related to the regulation of foreign banks.
Trump's relationship with Deutsche stretches back nearly two decades, beginning with a US$125m loan in 1998 for Trump's Manhattan skyscraper at 40 Wall Street, loan documents show.
But the relationship has seen its tension points. Trump sparred with Deutsche's investment-lending division in 2008 during a messy legal battle over a US$640m loan to fund construction of Trump's Chicago tower.
When lenders demanded Trump pay US$40m in unpaid debts he had personally guaranteed, Trump sued Deutsche for US$3b, claiming the tower's struggles had been triggered by a recession partially sparked by the bank itself. The case has since been settled.
In recent years, Trump's loans have come not from Deutsche's investment bank but its private-wealth division, where Trump works with a veteran banker, Rosemary Vrablic, whose clientele largely includes deep-pocketed real-estate developers. In a New York Times interview in May, Trump called Vrablic "the head of Deutsche Bank" and "the boss."
"She's a real banker's banker," said one of Vrablic's clients, Herbert Simon, a former chairman of the Simon shopping-mall giant and the current owner of the Indiana Pacers basketball team. "When I needed some quick action, a quick turnaround, she produced."
Vrablic did not respond to requests for comment.
Deutsche is one of the only Wall Street banks to be listed as one of Trump's active lenders. A former bank director said lenders in recent years were leery of partnering with Trump following years of high-profile trouble in his businesses, including six corporate bankruptcies.
Deutsche is now the biggest publicly known lender to Trump businesses, with four outstanding loans tied to Trump's most high-profile properties, according to financial-disclosure filings released in May.
Deutsche loaned US$170m last year for the new Trump International Hotel in Washington, or about 80 percent of what the Trump Organization said it spent toward redevelopment.
Trump also borrowed US$125m for his Trump National Doral golf course in south Florida and US$69m for the Trump International Hotel and Tower in Chicago. All of those loans come due by 2024, during what could be Trump's second term in office.
A Deutsche subsidiary, the Bank of China and other lenders also partnered to loan nearly US$1b in 2012 to a New York office building where Trump owns a minority stake.
Deutsche has also helped fund side interests close to Trump, including making a US$3.6m loan in 2011 to Titan Atlas, a failed South Carolina factory venture involving Trump's son, Donald Trump Jr. Deutsche lenders have also worked with the company of Trump's son-in-law, Jared Kushner.
Blumenthal last month made the case that a special counsel, independent of the president and the attorney general, should be appointed to ensure the impartiality and forcefulness of the DOJ's mortgage probe.
The DOJ earlier this month rejected Blumenthal's request. Assistant Attorney General Peter Kadzik wrote, "The Department has full confidence in its law enforcement professional and career attorneys to follow the established Department policies and procedures, which are designed to ensure the integrity of all ongoing investigations."
Trevor Potter, a former chair of the Federal Elections Commission who has advised several Republican presidential candidates, said that the Deutsche situation presents "enormously complex and worrisome issues" for the president and his administration and for bank officials.
"The idea that the bank might offer the president better terms in return for the government going easier on the terms of enforcement and fines is truly horrific," Potter said. "It is a possibility that illustrates the perils of this situation," he added, and it doesn't just affect the president.
"Anyone the president appoints in DOJ or Treasury is going to be aware - could not fail to be aware - that the president has a real stake with that enormous loan outstanding," Potter said. "As a result, everyone will be in fear of making a decision that might anger the president, their boss, or might cause him trouble."
