Behind the scenes at UBS

UBS's "fall from grace," as the Financial Times puts it, was nothing short of stunning. The funny thing is, that it was bound and determined not to be undone like this. Way back in 1988, in the wake of the Longterm Capital Management crisis, the bank decided: never again. It adopted tough risk control, overseen by top executives, that worked from a reputation point of view; it came to be seen as prudent lender. But the controls were aimed at counterparty risk, not market risk. And it obviously did not prevent a headlong rush into CDOs and other products, or into risky credit oriented hedge funds.    

For more:
- here's the Financial Times article
- here's an AP article on UBS letter blaming subprime risks

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