UBS Lowers Price of Security Seen as 'Cash'

[Roland]

UBS Lowers Price of Security Seen as 'Cash'

http://online.wsj.com/article/SB120672890827072299.html?mod=yahoo_hs&ru=yahoo

One of the world's biggest brokers is about to force its clients to take a haircut on a type of securities that investors had believed to be as safe as cash.
UBS AG began on Friday to lower the values of so-called auction-rate securities held by its clients, a move that will be a jolt to customers who had been told they were investing in a "cash alternative." The move is yet another way that the credit crunch that began with subprime mortgages has spread to unexpected places and upended conventional wisdom about the financial system.
The Swiss bank appears to be the first major firm to take this action and is expected to inform clients via their online statements shortly.


I have no ideal how serious this is or exactly what it all means. Does it mean that the account holder en masse will withdrawn their funds next week? Sounds like it to me. Will it spread to other banks?

[CitySearcher]

Hi Roland.

Just another piece of the 'financial wall' that is starting to crumble. Out of control practices and false senses of economic growth have eaten away at this wall of 'security'. Now people don't want to invest in these securities. The 'secured' are left holding the empty bag.

I would expect a run on the banks as soon as the Fed has exhausted all of their bandaid fixes to this mess. They are infusing billions more in the coming weeks. Our securities are not secure anymore...

[Roland]

I would expect a run on the banks as soon as the Fed has exhausted all of their bandaid fixes to this mess. They are infusing billions more in the coming weeks. Our securities are not secure anymore...

This is a Swiss bank so I don’t how much influence the FED has. I know the whole central banking system is of the global elite. It will be interesting to see if this spreads to the USA? I sure the FED will step in if it does. This coming week should be interesting.

[Roland]

UBS Cuts 5% From Clients' Auction-Rate Bond Valuation (Update3

http://www.bloomberg.com/apps/news?pid=20601213&sid=adMWraq8li6c&refer=invest

March 28 (Bloomberg) -- UBS AG has cut the value of the auction-rate securities its customers have in their accounts by about 5 percent following more than a month of market upheaval.

``The fact that they aren't worth par or may not be worth par is not going to be acceptable to any owners of these securities,'' said Gary Miller, a partner at the Houston law firm of Boyar and Miller. ``It's certainly not acceptable to me.''

Miller invested $750,000 from the sale of his house in auction-rate securities with UBS last December. After signing a contract on a new home, Miller said he called his broker to cash out of the securities and was told he couldn't. When he bought the debt, Miller said he asked his broker whether there had ever been an unsuccessful auction.
``The answer was, `No, there's never been a failure in the auctions,''' Miller said. He has sold $300,000 of his holdings. He still owns $450,000 of auction-rate preferred securities and municipal bonds.

[Roland]

UBS, Merrill, Bank of America Auction Sales Probed (Update4)

http://www.bloomberg.com/apps/news?pid=20601213&sid=afrHj6_DfOCw&refer=invest

March 28 (Bloomberg) -- Massachusetts Secretary of State William Galvin is investigating the sale of auction-rate securities by UBS AG, Merrill Lynch & Co. and Bank of America Corp. to individual investors in the state.

``My office has received calls from people who thought they were investing in safe, liquid investments only to find that they had, in fact, purchased auction-market securities that are now frozen and they cannot get their money out,'' Galvin said in a statement.

[Roland]

Breaking News: UBS Announces $12 Billion Loss, $19 Billion Writedown & Chairman Ospel To Step Down

http://timothysykes.com/2008/04/01/breaking-news-ubs-announces-12-billion-loss-19-billion-writedown-chairman-ospel-to-step-down/

Just like the title says. Switzerland’s largest bank lost $12 billion in one quarter and is writing down just over one third of their entire $55 billion marketcap. Long-term investors, read it and weep. The loss was actually anticipated by ANALysts, so it’ll be interesting to see how much damage there will be to the stock.

Also see:

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080331006792&newsLang=en