A Plea To UBS For Another Year Of Record Bonuses For Its Bankers - A (Tax Haven) Lampoon

Tyler Durden's picture

It has been a while since we have referred to Bloomberg columnist Jon Weil. The reason is we were waiting for something juicy, something one can sink one's teeth in, using money from a "tax free" Swiss bank account to pay. The need to wait is now over, as Weil explains why preserving the Swiss bank's bonus pool is right up there in the list of national priorities for the Swiss country as preserving the illusion that only you and your banker know who is behind that "numbered" account, in "Swiss Must Save UBS’s Bonus Pool or Die Trying." Cutting to the chase: "this year’s UBS bonus pool isn’t doomed, per se. It’s “at risk.” And where there’s a risk there’s always a way. What the UBS bankers need is a plan to ensure that the people who bear this loss are people other than themselves. Luckily, I have prepared one. To save the UBS bonus pool, UBS’s leaders must persuade the people of Switzerland to eat the losses the company is blaming on Kweku Adoboli, and to do so with joy in their hearts. Impossible, you say? Consider the following talking points..."

Quote Weil's list of record-bonus preserving arguments:

No. 1: Reimbursing UBS for the $2.3 billion would be an investment in the country’s future.

 

Surely it will cost Swiss taxpayers much more money later if they skip paying this small ante now. UBS’s writedowns during the last financial crisis topped 50 billion francs ($56 billion). To keep UBS afloat, the Swiss government put up 6 billion francs of bailout dough and took almost 40 billion francs of rotting assets off the company’s books. Better for the Swiss to nip these new “rogue trading” losses in the bud while they can.

 

No. 2: If the bankers don’t get their bonuses, the best and brightest UBS employees will leave for competitors.

 

Somebody has to stick around to clean up the mess being pinned on Adoboli. The Swiss must decide: Do they really want all of UBS’s best talent to leave for National Bank of Greece? Or worse, Deutsche Bank? This, too, would inevitably lead to even bigger losses later, which brings us to our next point.

 

No. 3: UBS isn’t actually a bank.

 

The Swiss government is the bank here, not UBS. In reality UBS is an off-balance-sheet SIV, or structured-investment vehicle, backed by the Swiss government. UBS shareholders and employees are the SIV’s “first-loss holders,” as they’re known in the trade. (UBS bondholders, as we all know, are prohibited by international law from incurring losses.) Normally the first-loss holders would exist to serve as a buffer, like swampland absorbing the storm surge from a hurricane, except these aren’t normal times. The better off the first-loss holders are, the safer the world will perceive UBS to be. So when the Swiss people rescue the UBS bonuses, what they’re doing is restoring the first-loss cushion to its rightfully bloated condition. And by doing so they’re saving themselves.

 

No. 4: Rescuing the bonus pool promotes Swiss competitiveness.

 

Anyone with even a passing knowledge of international debt markets knows that the price of Swiss government bonds has become ludicrously expensive. The flight into Swiss francs earlier this year has made life miserable for Swiss exporters. A standard-issue Rolex costs more than a five-bedroom house in Detroit. Viewed in that light, it could reasonably be argued that UBS isn’t losing anywhere near enough money to meet Swiss society’s needs. UBS finished last year with $1.4 trillion of assets, almost triple the size of Switzerland’s $524 billion annual gross domestic product.

 

Rather than purchasing unlimited quantities of foreign currencies to stop the franc from strengthening, a more efficient approach would be to tell the world that UBS is in grave danger of failing and that the Swiss people are eager to pay UBS bankers whatever bonus money is needed to turn the government’s budget surplus into a crippling deficit. With one bold gesture, the franc would plunge to new depths. Yields on Swiss government bonds would soar. And all of Switzerland would be richer for it.

 

No. 5: This is a matter of fairness.

 

When poor people lose their money, it’s a tragedy. There are so many of them, and they had so little to start with, there’s not much government can do, unlike with the wealthy. So the question must be answered: Is it really fair that hundreds of high-net-worth UBS professionals should pay for the alleged sins of a lone 31-year-old Ghanaian trader, just because they failed collectively to oversee him?

The U.S. let American International Group Inc. (AIG) pay more than $400 million in employee bonuses after that company’s $182 billion government bailout. Shouldn’t UBS bankers have available to them the same kind of social safety net that exists for others of their class? Discuss.

No. 6: The fundamentals of capitalism are at stake.

 

To paraphrase a line from AIG’s rescue plea, government backstops are the oxygen of the free-enterprise system. Without the promise of protection against life’s adversities, the fundamentals of capitalism are undermined, and we would all be on the road to serfdom.

The conclusion should be obvious:

The failure of the UBS bonus pool at a time of major global and economic instability would exacerbate the challenge of reigniting consumer confidence. Because Swiss banking has changed greatly in character over the last decade -- from just a basic provision of tax-evasion services to a vehicle for massively leveraged speculative wagering -- the effects of disrupting the industry are wide-ranging and significant.

Surely, after reading the above (and for the rest, click here), you can agree: it is mankind's sworn humanitarian duty to do all in their power to convince Siwtzerland that making sure the poor bankers in its biggest nationalized bank receive yet another year of record money, or else we will all suffer the consequences of capitalism gone horribly right.

And that is unacceptable.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
gojam's picture

I'm with you brother.

Extravagant bonuses, first against the wall when the revolution comes.

Hold on! Any chance UBS could find a scapegoat to offset their losses and justify their xmas bonus ?

Poor bastard

Tijuana Donkey Show's picture

I think the Swiss bankers should be fondued in boiling oil, or somehow killed with a clock/pocketknife. The french should be fried, and the Italians should be put through a pasta maker. As America is the most gun happy of the bunch, only American bankers should line up against the wall, but should be shot in the balls, one ball at a time.

MillionDollarBonus_'s picture

This is a matter of Swiss national pride. The reason we Americans can be proud of our economy is because we take care of national gems, like General Motors (1908), Merrill Lynch (1914) and Goldman Sachs (1869). To neglect a struggling company of such national significance is a crime against our childrens' confidence and pride in their heritage. I know it is tempting to succum to envy and jealousy, but you you know in your hearts that protecting these companies is a matter of national pride and it is the right thing to do.

MsCreant's picture

You are an excellent performance artist. I am inspired by the imagination needed to cook this crap up and never pop out of character.

mick_richfield's picture

If I trained trolls, I would force them to use the spell checker.  Or use easier words than "succum".

We have standards in this fight club, dammit.

russki standart's picture

This is one of the funniest news stories I've read in a while. Well done, Jonathan. As for UBS, we all know what they stand for:

United Bullshitters

Unadulterated Banking Scum

U Been Scammed

Problem Is's picture

Corporate National Pride

Martin Bormann, Rockefeller and Prescott Bush said the same thing about Auschwitz's famous I G Farben corporation...

Sabibaby's picture

It;s time to liberate the Swiss the way we've liberated Iraqi's and Afgani's and Libyan's. We're here for you People of Switzerland, we will liberate you from your riches!!!

upWising's picture

"It'a hard being a CYNIC these days because it is so much work to keep up."

-Lillie Tomlin

TrulyBelieving's picture

MillionDollarBogus,  You must be out of your mind. Any fredom loving free market thinking person pukes at this thought. You are bound to know that GM is just a wing of government now that they have been bailed out. They now have an unfair advantage over their competition and can do whatever they wish with big labor in charge and the gov backing it all up. You make me sick.

fxrxexexdxoxmx's picture

MDB is the best we have ever had. Keep up the great work!!!!!

Duuude's picture

Ahhhh...

 

US banks paid $130B in bonuses last year...

 

Remo Williams's picture

Let's say 2% of people in the US work in banking, that's 6,000,000 people.  Splitting your 130,000,000,000 figure evenly amongst them gives every employee a bonus of 21,666.67 USDWhich will be taxed at roughly 50%, so they will pocket $10833.33

Wow, just look at those rich bastards driving around in their brand new Geo Metros!  Up against the wall with em!  Oh wait, the distribution wasn't even and fairly split across every employee you say?  Well in that case we shouldn't unfairly punish the poor working schmoes at these institutions right?  But you argue we should let all of these institutions fail and therefore throw all of these folks out of work because a few at the top who grabbed up all of that money and will be unaffected by the financial havoc you guys seem to be so fervently praying for every day you wake up and bathe in the blood of a banker?

Just so we're clear, do you idiots every look in the mirror and wonder how such fine specimen's of the American public such as yourselves could hold the cognitive dissonance at bay while you waddle over to your walmart PC to post such drivel?

oogs66's picture

It's only a lampoon if it isn't true I bet a bunch of these arguments are being made.

Buck Johnson's picture

If they would have stood up and said no they won't show the accounts, maybe people would be likeing them but no more. 

Comay Mierda's picture

the swiss should hang this asshole

Manthong's picture

A Guinean got DSK and a Ghanian got UBS.

Lots of money and careers down the tubes and everybody gets it in the rear.

It just doesn’t get any better than this.

deez nutz's picture

The Swiss should hang this asshole

 

..... and the MILLION DOLLAR BONUS asshole right above too!

Moe Howard's picture

A standard issue Timex costs more than a five bedroom house in Detriot, why mention Rolex?

MsCreant's picture

Yeah you can get them for $1.00. Might say something like buying thousands of houses in Detroit maybe.

Ruffcut's picture

"No. 3: UBS isn’t actually a bank."

It is actually a criminal organization with many hobbies like fist fucking many humans on the planet earth.

Shitters_Full's picture

I don't know where to...oh, dear God...that is...no words.

MsCreant's picture

We can only warn folks not to look.

Antipodeus's picture

Now I do wish I hadn't looked!  Serves me right ... curiosity killed the pu ... CAT.  Reminds me of something out of "Predator". ... Still, the erotic possibilities are vaguely intriguing ...?

 

OneEyedJack's picture

A standard-issue Rolex costs more than a five-bedroom house in Detroit

So true, but would you sleep there?

Cliff Claven Cheers's picture

At this point I don't know why I even read the news anymore. All a bunch of effin corruption.

JW n FL's picture

 

 

It is hard for the Job Creators to do ALL that God's Work without Bonuses!

oogs66's picture

And how could Obama tax the rich if the Swiss didn't let them get rich? How would the UBS member of his economic advisory team raise money for his re-election?

Rick64's picture

the best and brightest

Personally I would like to see some less qualified people come in.  The best and the brightest don't really have a good track record lately.

wombats's picture

Yawn.  Who cares about the UBS bonus pool?  The only one anybody cares about preserving is the GS bonus pool!  As long as their bonuses are safe the rest of the world can sleep safely and soundly at night. <sarc>

 

GS Bonuses MUST be preserved at all costs.  There is nothing more important for the world economy.

Rick64's picture

We must abandon the principles of the free market in order to preserve it. This is classic Bush .

http://www.youtube.com/watch?v=x1G2Jyvpje8

Mercury's picture

Next lampoon....Venture Socialism: The Engine of American Prosperity

Oh wait, that's actually official policy....

gojam's picture

Stupid cow!

Not you Mercury but Venture Socialism is an oxymoron.

vast-dom's picture

Too funny. This makes Month Python look low-grade!

Judge Holden's picture

Agreed - genius.  The sad thing is that the line between parody and reality is quickly becoming obscured, as I'm willing to bet that several of these will be used.

1835jackson's picture

Voices tell me I should wear a thong

Cliff Claven Cheers's picture

Look at Deninnger over at his sight calling for justice for about the 4th year in row.  When is he going to give up, he isn't going to win?

slackrabbit's picture

so you wont complain when some one sc$ews you right?

Cliff Claven Cheers's picture

No I am just fatigued reading this shit day after day.  I can't understand for the life of me why none of the injustices are never prosecuted.  I'm just saying Karl has a lot more staying power. I give the Fuck up.

Ruffcut's picture

Denigga has been on tv and thinks in a very small box, filled with turds, thinking they are food.

Guess what, denig and others. NO JUSTICE IS CUMMING!!

Something else is, though. WHere you gonna be when the lights go out?

j0nx's picture

They aren't prosecuted because we live in a fucking police state and you as a citizen can't insist and make them do what should be LEGALLY done because you would be arrested and/or gunned down for trying it.

dick cheneys ghost's picture

Phil Gramm to gitmo..............NOW

Flakmeister's picture

Halle-fucking-lujah!

Perchance did someone read yesterdays postings by yours truly??

MichaelG's picture

Who knows, but if Leach & Bliley are extraordinarily rendered to Indonesia or Burma or somewhere, you won't see me complaining.

Flakmeister's picture

I'd settle for an ice floe in the Caribbean....

11b40's picture

......and send his wife with him!

For those who don't know, Sen. Phil Gramm was THE driving force behind the repeal of Glass-Stegall, as well as numerous other bits of legislation dismantling regulation of the financial industry in the late '90's & early Bush administration.  More than any other individual, he bears responsibility for this mess.

FROM WIKIPEDIA:

Some economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton — the Gramm-Leach-Bliley Act — was significantly to blame for the 2007 subprime mortgage crisis and 2008 global economic crisis.[9][10] The Act is most widely known for repealing portions of the Glass–Steagall Act, which had regulated the financial services industry.[11] The Act passed the House and Senate by an overwhelming majority on 4 November 1999.[12][13]

Gramm responded in March 2008 to criticism of the act by stating that he saw "no evidence whatsoever" that the sub-prime mortgage crisis was caused in any way "by allowing banks and securities companies and insurance companies to compete against each other."[14]

Gramm's support was later critical in the passage of the Commodity Futures Modernization Act of 2000, which kept derivatives transactions, including those involving credit default swaps, free of government regulation.[15]

In its 2008 coverage of the financial crisis, The Washington Post named Gramm one of seven "Key Players In the Battle Over Regulating Derivatives", for having "[p]ushed through several major bills to deregulate the banking and investment industries, including the 1999 Gramm-Leach-Bliley act that brought down the walls separating the commercial banking, investment and insurance industries".[16] 

As of 2009, Gramm is employed by UBS AG as a Vice Chairman of the Investment Bank division. UBS.com states that a Vice Chairman of a UBS division is "...appointed to support the business in their relationships with key clients."[32] He joined UBS in 2002 immediately after retiring from the Senate.[33]

THE WIFE:

Phil Gramm, then a Democrat, was elected to the U.S. House of Representatives. Five years later in 1984, he switched his party affiliation to the GOP and won the Senate seat that he still occupies. The move to Washington began a succession of appointed federal jobs for Mrs. Gramm. She headed the economics bureau of the Federal Trade Commission's Division of Consumer Protection and served as administrator of information and deregulatory affairs in the Office of Management and Budget. In 1987 The New York Times described her as "one of the Reagan administration's most vigorous deregulators." President Reagan called her "my favorite economist," naming her chairman of the Commodity Futures Trading Commission, the powerful regulatory agency which oversees the nation's commodities and futures exchanges.

Her dual roles as CFTC head and Senator's wife put her in a difficult position. There were times when Senator Gramm sought the support of some of the same agricultural and business interests that she was regulating. On trips to Texas during his 1989 Senatorial campaign she worked both on CFTC business and for her husband's reelection. After leaving the CFTC in early 1992, Wendy Gramm accepted lucrative directorships on the boards of several corporations she had regulated. Several of these corporations were also financial supporters of her husband's Presidential campaign. One of the boards on which Mrs. Gramm sits is Enron Corporation, a Texas natural gas company, which has given almost $35,000 to Phil Gramm over the years. She was named to the company's board, just five weeks after stepping down from the CFTC, which around the same time, exempted Enron and a group of other oil and gas companies from federal regulation on some of their commodities trading. The move was a big financial boon to Enron.

Enron pays Wendy Gramm $22,000 a year for her service on its board, plus $1,250 for every meeting she attends. The CEO of Enron, Kenneth Lay, is regional chair of the Gramm for President Campaign. When Senator Gramm kicked off his campaign last February with a record-setting fund raising dinner, Lay and his wife were present.

Another board Wendy Gramm sits on is that of Iowa Beef Processors (IBP), a large meat processing company. Based in Dakota City, Nebraska, IBP is a powerful corporation next door to a key election- year state, Iowa. Support for Senator Gramm at IBP came in handy last August at the Iowa straw poll in Ames. IBP sent a memo to its management level employees encouraging them to attend the straw poll, which is not restricted to Iowa residents, and informing them that $25 tickets and bus transportation would be provided by the Phil Gramm-for-President campaign. Gramm campaign buses picked up the IBP employees at eight separate locations in the states of Iowa, Nebraska, and Illinois and transported them to the straw poll, where their votes helped Gramm tie front-runner Bob Dole and gave the Gramm campaign an important boost.