This information provided by The Federal Observer, http://www.federalobserver.com
By Eliot Cohen
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"On November 13, Felix Unger was asked to remove himself from his place of residence. That request came from his wife. Deep down he knew she was right. But he also knew that someday he would return to her.
"With nowhere else to go, he appeared at the home of his childhood friend, Oscar Madison. Some time earlier, Madison's wife had thrown him out, requesting that he never return.
"Can two divorced men share an apartment without driving each other crazy?"
Opening from The Odd Couple television show, 1970-75
Aficionados of The Odd Couple TV show celebrate November 13 as Felix Unger Day, FU Day for short. If you send greetings by email with FU Day as the subject, you'll be reminded that FU often stands for something besides Felix Unger. And on this Felix Unger Day, I want to talk about a new version of The Odd Couple: 2 million individual investors and former United States senator Phil Gramm.
Thanks to legislation Gramm spearheaded as Senate Banking Committee chairman, Swiss bank UBS was able to buy US stockbroker PaineWebber. When Gramm retired from the US Senate last year ahead of questions about his relationship with major contributor Enron and his wife Wendy's position on Enron's audit committee, he went to work for UBS as vice chairman of its investment banking branch.
That brought Phil Gramm and 2 million investors, including me, together in our odd couple.
We make an odd couple because, during his 24 years on Capitol Hill, Phil Gramm was a chief enabler of corporate scandal. At the behest of the financial services and accounting industries, Gramm supported legislation that gave the securities and accounting industries virtual immunity from lawsuits for wrongdoing. As Senate Banking Committee chairman, Gramm used his bully pulpit and his budgetary clout to browbeat the Securities and Exchange Commission and stifle effective oversight of capital markets.
Gramm demonized legitimate regulation, nurturing the wave of corporate fraud that has cost investors billions. If investors were asked to choose a public enemy number one, Phil Gramm would make a formidable candidate.
UBS, however, denies that there's anything the least bit odd about coupling Phil Gramm with small investors. When I asked UBS to explain how investors can trust their money to a stockbroker that hires Phil Gramm, UBS told me, "We firmly believe his appointment will benefit all our clients." But they didn't say how, nor offer a single example of what Gramm has done to earn a salary that Gramm bragged far exceeded his US$150,000 paycheck on Capitol Hill.
Instead, in a reply that had both my name and address wrong, UBS claimed:
”As a former chairman and ranking Republican on the US Senate Banking Committee, Mr Gramm is one of the most knowledgeable individuals in the world on US banking matters.”
That's like the US government hiring Osama bin Laden because he speaks Arabic!
Mr Gramm has been at the center of some of the most crucial financial matters in the US over the past quarter-century. He is an author of the most important banking legislation of the last 60 years - the Gramm-Leach-Bliley Act - as well as the Regan [sic] tax cut and the Bush tax cut.
The Gramm-Leach-Bliley Act overturned decades of regulation that, among other things, prevented the sort of conflict of interest UBS faces with Gramm on one side of the house and 2 million of his victims on the other side.
Mr Gramm spent the bulk of his public career promoting and defending free markets and free trade, economic freedom and fiscal responsibility.
Gramm's relentless attacks on regulation enabled Enron executives to subvert free markets and evade fiscal responsibility.
Whatever the merits of the claims above - and don't forget they come from a company named UBS - they are indisputably irrelevant to the concerns of UBS's stock-brokerage clients. That's how we go from the odd couple to FU, and I don't mean Felix Unger.
In the recent catalogue of scandal from Enron to WorldCom to Tyco to Richard Grasso to mutual-fund trading fraud, not one case has been about corporate leaders trying to skirt the rules to beat the competition and make the company more successful. They haven't been about companies playing too rough in those free markets Phil Gramm so admires. This expanding catalogue of scandal has been all about executives finding ways to enrich themselves at the expense of investors.
In other words, all about finding new ways to say FU.
So on Thursday, November 13, I'm removing my brokerage account from UBS. If you do business with UBS, whether as a broker, banker or fund manager, think hard about the ethics of a company that hires Phil Gramm and won't be straight with customers about why.
Since the former senator from Enron represents the thinking that has mired financial markets in scandal, it's time for investors to say FU back to Phil Gramm and UBS.
Eliot Cohen is the founder of 8 1/2 in Hong Kong, a global communications firm specializing in financial issues.
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