Horrible economic news. This makes me sad

Trading is a zero sum game. But UBS doesn't benefit from all of this. People outside of UBS benefited from the guy's losses. UBS is sitting with a $2.3 billion loss on its books.

This guy fucked that bank. The compliance people who should have been monitoring his activity completely fucked up. Whoever this guy reports to completely fucked up.

UBS is now fucked, as a result. The company almost went bankrupt in 2008. It may not be that bad this go around, but it is close.

I don't feel bad for the company -- if it is going to run a shitty investment banking division that loses, it deserves what it gets. If it is going to drop the ball on compliance, as it did with this trader, it deserves what it gets.

But it's not something that made me think, "Celebration time." There are about 50,000 employees worldwide. The investment bank was doing poorly enough where thousands more layoffs (they did a round over the summer) were already coming. This is going to put thousands more out of work. That really is where my head was, when I heard about this guy. First I thought about what a poorly run bank UBS is. Then I thought about the toll.

 

Dude, you can't have it both ways. UBS's bonus pool last year was cut drastically. It has a regulatory agency in FINMA that has put restrictions on how the place can compensate its employees. EVERY bank has been going through this. Five years ago, bonuses flowed liberally and it was a significant portion of compensation. After 2008, the populist movement was, "Banks pay bonuses that are too high!" And they have been regulated to where that is not the case anymore.

The last few years, the bonuses have been severely curtailed. The bonus pool has shrunk every year -- by regulatory authority -- and 2/3 of the money has to be deferred and, people who earn the most have to take a significant portion in stock options (which are worthless when the stock is dropping like a rock, as UBS's stock has been). When UBS announced its total bonus pool last year, there was a near mutiny because the number was drastically reduced from previous years. The people in the lower ranks, as you put it, are complaining because they are not seeing all of this money you have it in your head that everyone makes at UBS.

You are basically all loopy about this over a small handful of people who earn large salaries. Do you understand that million dollar salaries are not the norm at UBS? Even the typical run of the mill MD, which is within the highest ranks of the bank, sees a couple of hundred thousand dollars are year. And they are not the typical UBS employee. For every one of them, there are hundreds of people who just pull in a regular salary for a regular job. THOSE are the people who are shitting pickles today because major layoffs are coming.

 

You have no fucking idea what you are talking about. Thousands of people will lose their jobs because of this guy in addition to the layoffs that were already coming. This is an additional $2 billion in losses the bank hadn't counted on.

Those people earning huge salaries at UBS are not getting it in the form of bonuses. Do you understand that?

Do you know how bank bonuses work, and how they have changed since 2008?

The bonus pool at UBS is no longer a significant portion of compensation. In the old days, you earned a salary, and then received a huge bonus. It's how the money was slung around. After 2008, the regulatory agencies dropped the hammer because people decried bank bonuses. Overall salaries decreased a great deal. Base compensation increased slightly to make up for the fact that there would be no more huge bonuses. Bonuses were reduced dramatically, and most of the money is now deferred. They get smaller bonuses and only a quarter of it is in the form of cash.

Those 13 people you want to make this about? They earn huge salaries. Their salary doesn't come in the form of a bonus. That has been done away with by FINMA.

But even if you want to make this about 13 people, or even 300 people at the bank who earn what you deem a huge salary. Put those people into the context of the 50,000 others. I can't believe I have to point this out. This is not about "those rich assholes." Those rich assholes walk away with a lot of money either way, including anyone from the management team who might be made the token scapegoat.

You are so happy about this, when the toll is going to be several thousand jobs cut. It's really not that funny. It's sad.