Monday, September 19, 2011


For those of you scoring at home, a single (supposedly supervised) trader in the UBS investment division manged to urinate away $2B of UBS operating funds.

It's bad if you're a UBS equity holder or depositor but, in a way, it couldn't have come at a better time. It has renewed the discussion about either separating or firewalling the retail part of a bank from the trading part of the bank. This is an old discussion. A couple of decades ago, there was a separation rule in the USA.

I think now, the discussion is not whether there are good arguments for dividing the investment corporation from the retail banking operation. The discussion is: are there any good arguments for NOT firewalling the trading function from the retail, loan, credit card and customer service aspects of the Bank? I really can't think of any.


At 4:20 AM, October 03, 2011, Anonymous Anonymous said...

Perhaps you can clarify for those trying to keep score at home, but finding the rules murky. I see umpires expanding the strike zone for important playahs, who are using corked bats and steroids (say it ain't so).

There should be capital controls, and "bankers" gambling in murky off exchange derivatives should be stopped and investigated ... certainly not bailed out.

REal banks like Quincy's Mercantile can't invest/trade the same way "investment banks" can, as I understand it. The game was to get the playahs, (investment brokerages) labeled as banks, so they could qualify for government favors? Trading away our country and freedoms for profit is just a game ... right?

So politically connected Goldman Sachs "Bank" gets underwritten by the taxpayer when their 50:1 leveraged bet with some shady loan sharks goes bad. Most bankers know their customer, and lose if they make bad loans.

Raines testified that Fannie was safe at 50:1 and he got his millions, and Barney Frankly backed him ... before their Titanic losses. Yet they still are sitting pretty ... in fact it is hard to find anyone being investigated for perhaps the biggest frauds in history.

Corruption is the problem. Broken Glass-Steagall was 32 pages, but Dodd-(not so) Frank is thousands and does little ... because it is mucked up by dirty lobbyists that are the scribes still writing our bills. Their lawyers put in fine print that makes life hell for accountants and small business, but carves out tax havens and rooms for foul play for the well connected big boyz.

No point arguing over "de-regulation" as the problem ... the devil is in the details. We had plenty of rules, but any honest enforcers were directed away by powerful bosses. This problem didn't sneak up on us, it was well planned and funded.

Our government is occupied territory, occupied by power groups. Most politicians believe that power is to be used for personal gain, not public service. The perceived ignorance and arrogance is partly just the mask of deep criminal activity.

Of course this is not true in All American City Quincy, where all lawyers and politicians are as pure as the driven snow, and there is no collusion, cronyism, nepotism, or multi-millionaires getting serviced on the backs of the "little guy" ... (by the way, I missed the memo, what are we all fixing our gas prices at this week?)



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