Questions Arise About UBS Risk Controls
Alistair MacDonald and Deborah Ball (WSJ – subscription required)
September 16, 2011

“Risk-management and control specialists are again questioning the banking industry’s ability to manage risks and regulator’s efforts to police the sector after a UBS AG trader lost about $2 billion in unauthorized trades. …The UBS trader’s bets were from one of the bank’s proprietary trading desks, and the lender’s failure to catch his actions could become a rallying cry in the U.S. for tighter regulation of bank-trading operations. A part of the Dodd-Frank financial-overhaul act called the Volcker rule limits banks’ ability to trade for their own profit. ‘The largest banks have grown so big and so complex that even their own management cannot fully understand or control the risks they take,’ said the consumer advocacy group Americans for Financial Reform, in a statement Thursday. The exact rules guiding banks’ proprietary trading haven’t been finalized, but they are expected to allow regulators more frequent insight and transparency into banks’ trading operations and positions.” Click here for more.