Saturday February 21, 2009, 4:28 pm
Former Texas Sen. Phil Gramm has emerged as the key behind-the-scenes economics/Wall Street guy for John McCain and is being touted as the treasury secretary in waiting. Since 2002, Gramm has been an executive with the U.S. operations of UBS, the giant Swiss Bank. An unintentionally hilarious interview with Gramm
on the Wall Street Journal editorial page last week asserted that Gramm
has "been a key instigator of some of the biggest money-making UBS
deals of recent years." The interview was noteworthy not just for
first-class butt-kissing, but for deliberately gliding over the
avalanche of disasters in the past year that has turned UBS from a
respected Swiss titan of discretion and risk management into a
laughingstock. As this one-year chart shows, UBS's stock lost nearly 70 percent of its value and now stands at levels not seen since 2002, when Gramm signed up.

OK, the entire investment banking business in the past year has been an international clown show. Virtually every U.S. and European institution has been laid low by badly placed bets on subprime mortgages and forced into humiliating rounds of dilutive capital raising. Bear Stearns was clearly the worst. Citigroup, Merrill Lynch and Lehman Brothers have taken large hits. But among foreign institutions, none has fared worse in the United States than UBS. And its employees seem to have compounded their violations of common sense with violations of more serious laws.

UBS's investment banking unit made disastrous forays into subprime lending. Last December, having already announced a third-quarter loss, UBS raised about $13 billion to replenish its balance sheets, mostly from the Government of Singapore Investment Corp. In the fourth quarter of 2007 and the first quarter of 2008, it racked up Mont Blanc-sized losses on subprime debt of nearly $32 billion. In May, it sold about $15 billion worth of mortgage-related assets to the investment firm
BlackRock—but only after it agreed to finance most of the purchase price. In June, UBS raised another $15.5 billion in a rights offering. The credit losses—some $38 billion so far, according to UBS—caused the bank to replace its chairman and install new leadership at its investment bank.

UBS was hardly alone in getting caught up in the global credit bubble, although its losses are truly impressive. But UBS has suffered further reputation damage. Late last month, the state of Massachusettscharged UBS with screwing over well-heeled customers who had purchased auction-rate securities. The mechanics of auction-rate securities—instruments that pay a slightly higher rate of interest than municipal bonds or cash deposits and were thought by many purchasers and brokers to be as safe as cash—are complicated. But the issue is relatively simple and familiar to anyone who has combed through the Spitzer Wall Street research settlement of 2003. UBS stands accused of selling retail brokerage customers products that turned out to be profitable for the bank's investment banking unit but caused the customers to suffer significant losses. (Read some of the internal e-mails here.)

These charges, levied by a state regulator, are already causing reputation damage to UBS. (Dow Jones reported today that retail brokers are fleeing.)
UBS's asset management business is likely to suffer further from an
ongoing federal investigation, in which Bradley Birkenfeld, an American UBS private banker who was busted on tax-evasion charges, has plead guilty and is cooperating. Among the revelations so far: Birkenfeld helped a client bring in diamonds from abroad by stashing them in a tube of toothpaste.

The carnage at UBS is far from over. Last Friday, on July 4, when U.S. markets were conveniently closed, it announced preliminary second-quarter results, which indicated the possibility of further losses. Over the weekend, the Financial Times reported that UBS's write-downs could total another $7.5 billion. Evidently, traders
read the news on the way in to work, as UBS's stock fell 7 percent in trading on Monday.

Critics have charged that Gramm's action as a senator helped lay the groundwork for some of the problems in the housing and oil markets. But it's hard to pin any
of the UBS debacles on the former Texas senator. At UBS, Gramm held the post of vice chairman, a position Michelle Leder dubbed in Slate "the greatest job in business" for its combination of high status and low work rate. Gramm was a lobbyist and adviser, not an operating executive. And he had nothing to do with the forces that impelled banks and banking executives into foolish behavior in recent years; cheap money, greed and a bubble mentality are far bigger than Gramm. But UBS's continuing travails should lead us to wonder how effective Gramm is as an elder statesman. As an adviser, an economist, an expert in the ways of Washington and in the American financial system, part of Gramm's job surely was to advise the bank how to stay out of investment and regulatory trouble. Oops!



Of course, being a senior employee of a bank at a time when it was destroying shareholder value, screwing over customers and having run-ins with federal prosecutors shouldn't preclude one from serving in the cabinet. Apply that standard across the board, and—given the pervasive incompetence and mendacity on Wall Street in this decade and last—the next president, Obama or McCain, will have to look to a tiny credit union in Kansas for a treasury secretary.

Saturday February 21, 2009, 4:35 pm

Phil and Me: Ex-Sen. Gramm Says of the Economic Collapse, Don't Blame Me (Video)


Last year, I wrote an article explaining how former Republican Senator Phil Gramm had helped grease the way to the subprime meltdown in 2000 when he was chairman of the Senate Banking Committee. Gramm wouldn't talk to me for the article. At the time, he..

Saturday February 21, 2009, 4:37 pm

UBS: American Investors' Identities To Be Revealed By Swiss Banks
The deal could mark the end of Swiss banking as we know it, ... The curtain is being peeled back on the infamous secrecy of Swiss banks. ...revealing names of those whom the authorities suspect of using offshore accounts to evade taxes.

Remember that Dick Cheney bet against the U$ Dollar and moved ALL HIS MONEY offshore!!!

Saturday February 21, 2009, 9:58 pm
Phil ‘mental recession’ Gramm attempts to resuscitate his reputation.top 25 people to blame for the financial crisis. Second on the list (and leading its readers’ poll) is former Sen. Phil Gramm (R-TX). Gramm advised Sen. John McCain (R-AZ) during the presidential campaign, famously referring to America as a “nation of whiners” in a “mental recession.” In the 90s, he also played an instrumental role in deregulating the financial sector. Today, Gramm has an op-ed in the Wall Street Journal denying that the deregulation he promoted had anything to do with the financial crisis. Gramm relied on a series
of tired conservative tropes — like blaming the Community Reinvestment Act and Fannie Mae and Freddie Mac — in an attempt to exonerate himself from well-deserved culpability. The Wonk Room has more.

Sunday February 22, 2009, 3:27 pm
Blue, as usual, an excelllent article +. One note, however, the President is Obama, not McCain referring to ur last sentence from ur 2-21-09 4:28 pm post. I know it's damned difficult to keep track of all of these idiotic TX Regpugnicans and Gov. Perry wants to forego the Stimulus package? Yeah right!! Gov. Perry Idiot, we need it.
Now if we can just get rid of Cronyn's smug look off the tube and let 'em move in with Duh bya and Laura in Dallas, we'll all be happy campers. Just say NO to Sen. Hutchinson's bid for guvnah!

Sunday February 22, 2009, 9:42 pm
I can't see a picture of Phill Gramm without remembering Al Franken do an impersonation of him while interviewing him at the RepubliCon convention. LMAO

Monday February 23, 2009, 2:18 am
Blue: Truly impressive article...mucho graci

Everytime I see Gramm's repulsive face GRRRRR I have an insatiable urge to rip his squinty eyes off of his face...sorry but I loathe that b_st_rd for what he and his partner in crime, Rudman, did to the VA bennies (slash and burn) of my friends and me :C

Does anyone else besides me think that Phil Gramm strongly resembles a depraved Muppet???

Monday February 23, 2009, 4:09 pm
d r i f t g l a s s: If you want to know what is really at the corrupt, oozy heart of the Conservative movement (and its filthy little avatar, the Republican
Party) look no further than their ideological trade show: the Conservative Political Action Conference, or CPAC.

Tuesday February 24, 2009, 11:05 am
Economy Video of the Day: Krugman On Phil Gramm


Video of the Day: Krugman on Phil Gramm (this is political, but Krugman says "if there is another great depression, Phil Gramm is the guy to do
it"). 1 min 31 secs... Mccain advisor (Gramm) would be 'just the guy' to lead us into a Great Depression

Tuesday February 24, 2009, 11:16 am
Yep, While Cornyn is playing cozy games with Houston billionaires, Texas Governor (hair for men club)Perry says Texas will not take money from the Federal Government. He and his tiny world may not need the money, the state of Texas does. Not that this issue is important to him or people that think his cadre of reds. Phil Gramm has proven himself to be a dastardly excuse for a human being.

Tuesday February 24, 2009, 11:20 am
Kit, it look slike Cronyn and Jindal both have their head$ up their butt$.

Tuesday February 24, 2009, 11:26 am
"Phil Gramm? Wait, what did he do wrong?"

Former Senator Phil Graham-- or as he was also known Senator Enron-- did so much wrong it boggles the mind. He pushed through the repeal of Glass-Steagall (banking regulations in place from 1932-1999).

He pushed through energy deregulation, and an end to the prevention of oil speculation (which lead to oil speculation and Enron coming into CA and robbing us blind like Bonnie & Clyde). When he left the Senate, he went to work for the United Bank of Scotland as a lobbyist-- but before he left the Senate, he pushed AGAINST banking disclosure requirements that would have made it easier for us to track the money that funds terrorists against our Country.... what did Phil Graham do wrong? The better question since Phil Graham did SO MUCH wrong, is what did he not do wrong, if anything?

http://www.huffingtonpost.com/m.s.-bellows/obama-rapid-response-ad-s_b_127636.html

Sunday March 1, 2009, 5:38 pm
UBS Raises Bankers' Salaries As Bonuses Fall