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Maybe you had a bad month, but – wow – July was a bummer for UBS! This Swiss- based banking powerhouse is the world’s largest money manager for rich people, but even its billions couldn’t paper over its incompetence and malevolence.
UBS’s month started with its chief lobbyist, Phil Gramm, having to resign as the co-chair of John McCain’s presidential campaign. Responding to ordinary people’s concerns about $4 gasoline, job losses, the housing crash, and other signs of middle-class decline, this multimillionaire lobbyist and former-senator snarled that America has become a “nation of whiners”. Oooo… bad image.
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But things cascaded downhill from Phil. In mid-July, a U.S. Senate sub-committee documented that the bank has been engaged in an ongoing scheme to help wealthy Americans cheat on their income taxes. Using fake corporations, offshore tax havens, code names, secret credit cards, diamond smuggling, shredding rooms, and falsified reports to the IRS, the bank has helped 19,000 very rich Americans hide some $18 billion of their loot from being taxed to support our schools, roads, military, and such. Oooo… bad image, again.
But July was unrelenting. At the end of the month, various states sued UBS for consumer fraud involving “auction-rate securities.” The bank had told investors that these funds were safe and easy to cash in. Earlier in the year, however, the market for these securities had collapsed, and a senior UBS honcho called them “a complete loser.” Yet, the bank continued to pitch them as a wise investment. More damning, top UBS executives had sold off their own auction-rate securities, even as they were still selling them to unsuspecting customers. More than 50,000 UBS customers were left holding this empty bag.
This is Jim Hightower saying… As UBS has shown us in one month, not all of the bank robbers come from outside the bank.
“New York Accuses UBS of Misleading Investors,” The New York Times, July 25, 2008.
“UBS’ Ads Are Off The Mark,” New York Post, July 17, 2008.
“Foreign Banks Recruit U.S. Tax Cheats,” Creators Syndicate, August 5, 2008.
“Sen. Levin: Shut Down Giant Swiss Bank UBS,” http://abcnews.go.com/Blotter/story?id=5394214, July 17, 2008.
“Senate: UBS, Liechtenstein aided US tax cheats,” http://money.cnn.com/news/newsfeeds/articles/apwire/6947ce6d2f9aa975d4c9c8f58678161b.htm, July 17, 2008.
“Ex-UBS Banker Pleads Guilty in Tax Evasion,” http://www.nytimes.com/2008/06/20/business/20tax.html?fta=y, June 20, 2008.
“Former UBS Banker Pleas Guilty to Tax Evasion,” http://tpmmuckraker.talkingpointsmemo.com/2008/06/former_ubs_banker_pleas_guilty_1.php, June 20, 2008.
“New Offshore Bank Limits For U.S. Clients, UBS Says,” http://www.nytimes.com/2008/07/18/business/worldbusiness/18ubs.html, July 18, 2008.