Lehman Brothers And UBS Are Cut From The Same Cloth
Last Thursday marked the three-year anniversary of the spectacular collapse and bankruptcy of Lehman Brothers. Fittingly enough, the next morning a UBS trader in London was arrested on fraud charges for his role in a trading scheme that triggered losses of at least $2.3 billion at the increasingly rickety Swiss investment bank.
Lehman’s collapse shattered the world financial markets in 2008 and has left a legacy of decimated retirement and life savings accounts for ordinary, Main Street investors. The revelations that a UBS trader cooked the books for perhaps as long as three years raises the specter of a banking system so devoted to greed it will ignore reality.
Wall Street’s love of easy money, along with its uncanny ability to look the other way when the truth is inconvenient, are by now well documented. Investors were sickened to learn of the risky bets and 30-1 leverage that Lehman used to pump up profits to pay handsome bonuses to its executives. Those same risky bets-made with the knowledge and blessing of Lehman’s senior management-ultimately destroyed the firm and devastated the world economy. Now, according to the Wall Street Journal, it turns out some inside UBS London knew enough to question the trader’s allegedly fraudulent conduct fairly early on, but he was allowed to keep on trading.
You may be asking: is the collapse of Lehman Brothers really connected to this latest UBS fiasco? Aren’t these two events really different?
The players may be different but the rules are the same.