“The Mess at UBS”: Subprime Losses and the Halo Effect

       Swiss banking giant UBS is getting plenty of attention from the press – and most of it for the wrong reasons — following a $18.4 billion write-off from subprime mortgage securities   In its March 3 issue, Business Week ran a feature story titled “Behind the Mess at UBS.”  According to BW, the worst may not be over – future write-downs are likely.  More grim news may be ahead.

 

       So it was not surprising that Swiss Radio contacted me last week to speak about UBS and its performance.  The interviewer’s first question was about the general tendency for high performers to falter in subsequent periods – were UBS’s losses one more example of how yesterday’s heroes become tomorrow’s bums?  Was this proof that UBS had feet of clay after all?