More on that in a minute.
This is the biggest yearly loss in the entire corporate history of the bank, and will result in the layoff of 2000 of its employees, mainly in its investment banking division, the part of the bank responsible for the losses.
“UBS, the world's biggest banker to the rich, was one of the first to be hit in the credit crisis, as a disastrous expansion into investment banking forced it to write down almost $49 billion and shattered its reputation for Swiss solidity.”
And guess who is Vice Chairman of UBS’ Investment Bank?
None other than former Senator from Texas Phil Gramm.
Those who have read my previous postings on this guy know where I am going with this.
Phil Gramm can be singled out as singularly responsible for the global financial crisis that we find ourselves embroiled in right now. He spearheaded the 1999 Gramm-Leach-Billey Act, an act that repealed much of the Glass-Steagall Act the 1933 act that established, among other things, the FDIC, but also prohibited a bank holding company from owning other financial companies.
It was the repeal of the regulations of the Glass-Steagall Act combined with the 2000 exemption of over-the-counter derivatives such as credit-default swaps from regulation that brought on the eventuality of the credit crisis that we have today.
By the way, Gramm almost completely denies any culpability in his acts being the root cause of this crisis.
“…Gramm acknowledged that the credit-default swaps market as it developed was ‘so opaque that nobody knew who was holding the bag.’ But he said he didn't buy that it was a major precipitating cause of the crisis. What was? ‘It was a confluence of two forces,’ he said. ‘Alone, neither would have created a cataclysm’”
Now it appears that the “confluence of two forces” has come home to roost in Phil Gramm’s own backyard, and 2000 of his workmates will have to update their resumés.
And what do you think. Do you think Gramm himself will have to get out his interview suit? Do you think in this era of accountability someone who has such convincing forensic evidence that even the OJ defense of “if it doesn’t fit you must acquit” won’t fly, we will finally have a deserving head roll out UBS’ front door?
Will Phil Gramm lose his job at UBS?