Too Big to Fail, Too Stupid to Stay in Business

UBS(UBS) spent most of yesterday assuring anyone who would listen that everything will be better next time.

Another $2.3 billion loss from unauthorized trades? Very unlikely. (There are no guarantees in life, after all.) "We are doing everything in our power to address the frameworks, practices and procedures that should have worked better and strengthen their enforcement," said Carsten Kengeter, chief of investment banking, in a letter to employees.

See if (UBS) is in our portfolio

It was the most reassuring thing I read yesterday, right up there with the announcement from Preet Bharara, the U.S. Attorney for the Southern District of New York, that his office has gotten out its Zagat guides and was "launching of a review of more than 50 of Manhattan's most popular restaurants to determine whether they are being operated in compliance with the Americans with Disabilities Act of 1990."To be candid, I was hoping that the U.S. Attorney in Manhattan would be so upset by this latest banking atrocity that he would launch a review of 50 of Manhattan's most popular banks to determine if they were being operated in compliance with the law. Not happening. Under the Obama administration, you see, the banks are pretty much on their own. Unlike restaurateurs, you see, their CEOs are major campaign contributors.As for the billions upon billions of dollars in fictitious trades that took place over a period of three years: Well, what of it? UBS is a big bank. Stuff happens. "The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio," the company said in a statement. You know how it is. A billion here, a billion there. It's normal business flow. You can't expect UBS to keep track of that kind of money, certainly not to figure out if the positions being taken were actually being taken. Besides, the fictitious trades took place in London, not in New York. Hey, the cops there don't even carry guns. Had it happened here, I presume, alleged rogue trader Kweku Adoboli would have been deterred by the stern visage of Preet Bharara, who could have been counted upon to divert a sufficient cadre of prosecutors from restaurant-ramp patrol to nip in the bud such malfeasance.

1 2 3 Next › Last »

Citigroup(C), meanwhile, is expanding globally under the same management that led to its catastrophic losses in 2008. As recounted in Ron Suskind's devastating book, Confidence Men, a plan to dismantle Citigroup was sabotaged by Treasury Secretary Timothy Geithner. Fortunately for UBS (its top managers, that is), the bank is domiciled in Switzerland, so even a reborn Geithner can't seriously tamper with it.

>To order reprints of this article, click here: Reprints « First ‹ Previous 1 2 3