Source:
ReutersZURICH (Reuters) - Swiss bank UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) will have to write down another $5 billion on its risky investments in the second half of the year, a newspaper reported on Sunday.
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The paper said it expected UBS to update the market shortly before an extraordinary shareholders meeting on October 2 after the third quarter closes at the end of September.
Last month, UBS, Europe's worst casualty of the credit crisis, said writedowns climbed a further $5 billion in the second quarter to top $42 billion.
Sonntags Zeitung said it expected UBS to write down $1 billion on subprime mortgages and $1 billion on Alt-A loans that are made to borrowers with less than prime credit ratings but who are above subprime.
The paper also predicted about $2 billion in write downs on UBS's investments in monoline bond insurers and about $1 billion on student loans but said the company was unlikely to seek to raise more new capital.
Read more:
http://www.reuters.com/article/bondsNews/idUSTHO43401920080914
Economic conservatives take heart: Phil Gramm is influencing the candidate's platformNEW YORK (Fortune) -- Now that the faltering economy has replaced national security as the overriding issue in the presidential campaign, John McCain is portraying himself as a budget-shrinking, flat-tax-embracing, healthcare-privatizing champion of free markets. But is this Reaganesque zealot the real John McCain?
The big question is whether McCain's radical agenda is simply designed to rally the Republican base, or would prove a blueprint for a McCain presidency. Given the Arizona Senator's maverick record, voters have every reason to distrust the new McCain. He twice opposed the Bush tax cuts and keeps dropping disturbing lines like, "I don't know as much about the economy as I should."
But economic conservatives should take heart. McCain's chief economic adviser - and perhaps his closest political friend - is the ultimate pure play in free market faith, former Texas Senator Phil Gramm. If McCain follows Gramm's counsel, and most of his current positions are vintage Gramm indeed, his policies as president would represent not just a sharp departure from the Bush years, but an assault on government growth that Republicans have boasted about, but failed to achieve, for decades.
Since retiring from the Senate in 2002, Gramm - a former economics professor at Texas A&M - has been circling the globe as an investment banker at UBS (UBS). In July, McCain called on his old friend to salvage his floundering campaign.
Did Texas' Phil Gramm help undo UBS?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.
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