The Game that goes on and on: a Swiss Bank, a President, and the Permanent Government

THE GAME THAT GOES ON AND ON:
A SWISS BANK, A PRESIDENT, AND THE PERMANENT GOVERNMENT

By RUSS BAKER
Published: April 21, 2010

EXCERPT...

When most people criticize those aspects of government that seem most impervious to the democratic process, they cite the permanency and perceived self-interest of the mandarins of the Washington bureaucracy. But when it comes to real power, an ability to come out ahead no matter which party is in power, it’s hard to top certain financial institutions.

UBS is very much a part of that permanent government. Though not a household name in the United States, UBS is a major player in the Beltway game. During the 2008 campaign, while Robert Wolf was courting Democratic hopeful Obama, his UBS cohort, former Senator Phil Gramm, was working the other side of the street. As chairman of the Senate Banking Committee in the 1990s, Gramm, a corporate-friendly Texas Republican, played a key role in the deregulation of the banking industry, an act so central to the nation’s financial collapse. Since 2002, Gramm has been UBS Americas’ vice chairman. In 2008, he was the leading economics adviser for Obama’s opponent, John McCain—and even touted as a possible treasury secretary in a McCain administration.

The bottom line: UBS hedged its bets, and so had an inside track no matter which party took the White House. Thus, when Obama won, it was Wolf who ascended. The new president named the banker-donor to his White House Economic Advisory Board.

The important machinations behind this accrual of influence rarely get attention in the frenzied hustle of the news cycle. One reason is that they do not seem like news at all, since they are essentially woven deeply into the fabric of politics and government, thus hidden in plain sight. Another is that they are dauntingly complex.

SNIP...

In any case, it has become increasingly clear that tax evasion is but a piece of a troubling larger picture. The states of New York, Texas and Massachusetts sued the bank in 2008, accusing it of misleading investors about risks in its auction-rate securities market. UBS executives dumped their own holdings when the supposedly safe investments took a nosedive, yet continued to recommend them to customers. In Puerto Rico, a Bloomberg News reporter found, UBS had created its own closed-loop system for generating profits —it advised the Commonwealth to issue bonds, marketed the bonds to investors through UBS mutual funds, and then loaned the mutual funds money so they could buy the bonds. As James Cox, a Duke law professor and expert on finance and law said at the time, “I’ve never seen such a blatant series of conflicts of interest.”

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http://whowhatwhy.com/the-game-that-goes-on-and-on.html

UBS Money Laundering: What Did Phil Gramm Know?

Robert Scheer
Veteran Journalist and Editor of Truthdig.com
Posted: August 19, 2009 04:01 AM

In recent days yet another wealthy private customer of the Swiss-based banking conglomerate UBS admitted to criminal fraud in a growing parade of perp walks that could extend into the thousands. It is a case that threatens to ensnare former Sen. Phil Gramm, the Texas Republican who is vice chairman of UBS' investment banking business. Given the widespread involvement of UBS in what the Justice Department alleges were systematic efforts to violate U.S. tax laws, it must be asked: Did Gramm as a top executive have no inkling about what was going on?

Perhaps, but for Gramm this has to be a moment that at the very least tests his ideological commitment to the radical deregulation of banking that he championed during his 24 years in Congress. He joined UBS soon after the bank acquired Enron, a company that had gone bankrupt after jumping through the "Enron loophole" in the Commodity Futures Modernization Act, which Gramm had pushed though Congress. Gramm's wife, Wendy, had been an Enron board member and head of its audit committee but failed to sound the alarm before the Houston-based company collapsed. Then UBS itself ran into big trouble because of $37 billion in bad mortgage debt made possible by derivatives market deregulation engineered by then-Sen. Gramm. U.S. taxpayers have had to pony up money to heal UBS' self-inflicted wound. But the bank's involvement with tens of thousands of secret accounts tied to allegations of tax evasion raises starker issues -- of possible criminal fraud through practices that Gramm as a senator helped keep opaque.

In his last years in the Senate, Gramm succeeded in blocking legislation that, as the New York Times editorialized, would have made it easier "to crack down on offshore tax havens" and "would have expanded rules that require banks to find out more about individuals and foreign jurisdictions they are dealing with." The Times noted, "The legislation won bipartisan support but was blocked by Senator Gramm of Texas, a foe of government regulation. ... "

Following that victory, Gramm stepped into a top position at UBS, stating: "It will provide me with an opportunity to practice what I've always preached.... I have a strange combination of experiences that a lot of people don't have... knowledge of economics, a knowledge of government policy." Given that knowledge, it is legitimate to ask just how Gramm could have been unaware of the extensive efforts of his new employer, UBS, to thwart the IRS. In court cases involving UBS over the past year, witnesses have provided extensive details of the bank's alleged practices in abetting tax avoidance.

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http://www.huffingtonpost.com/robert-scheer/ubs-money-laundering-what_b_262719.html?view=print

UBS in drug money laundering case: Employee suspended - Police arrest Colombian woman - dollars 150m account frozen

PETER RODGERS, Financial Editor
The Independent (UK)
Thursday, 14 April 1994

UNION Bank of Switzerland was yesterday caught up in the biggest drugs money laundering case in Swiss history, when it emerged that police have arrested a Colombian woman and frozen a dollars 150m ( pounds 103m) account at the bank.

UBS, Switzerland's biggest bank, also confirmed that one of its employees, believed to be a vice-president of the bank, had been arrested and suspended from work.

Jacques Antenen, examining magistrate in the Vaud region, said an investigation had been under way since last June into a Colombian group with links to the notorious Medellin Cartel.

Mr Antenen said that the detained woman, who invested around 1m Swiss francs ( pounds 485,000) in shares and property in Lausanne, was one of a number of Colombians under investigation, although the others were not in Switzerland. The second key person under investigation has never left Colombia.

It emerged that the UBS account where the money was traced was opened 15 years ago and had been little used in the past 10 years, with only small sums paid in and out.

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http://www.independent.co.uk/news/business/ubs-in-drug-money-laundering-case-employee-suspended--police-arrest-colombian-woman--dollars-150m-account-frozen-1369982.html

Swiss Minister: UBS At Risk Of Collapse If America Plays Hardball With Tax Evasion Case

Swiss mega-bank UBS could collapse if the U.S. plays hardball with its tax fraud investigations.

If true, it's a pretty sad admission about the state of UBS right now. Perhaps the end is near for the 'Swiss model' of banking, by which we mean Swiss tax evasion services.

"The actions of UBS in the United States are very problematic. Not just because they are punishable but also because they threaten all of the bank's activities," Eveline Widmer-Schlumpf told Le Matin Dimanche newspaper.

"The Swiss economy and the job market would suffer on a major scale if UBS fails as a result of its licence being revoked in the United States," she said.

Read more: http://www.businessinsider.com/swiss-ubs-at-risk-of-collapse-2010-2#ixzz1GaA749Rd

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http://www.businessinsider.com/swiss-ubs-at-risk-of-collapse-2010-2#ixzz1Ga8c3ykv

Like separation of state powers and separation of church and state: Until we separate the political arena from the financial arena, Wall Street will get what it wants and We the People will be left carrying the bags, wondering, "What happened?"