From the Wall Street Journal (emphases added):
UBS AG UBSN.VX +4.11% lost sight of its historic culture and principles on a rapid growth spree in the 2000s, setting a backdrop for the interest-rate fixing scandal that has cost the bank $1.5 billion, said Andrea Orcel, chief executive of UBS’s investment bank.
He said part of the problem is that UBS didn’t understand enough about some of the businesses it was running “to make sure you’re on the top of the standard of integrity that you want to have.”
Mr. Orcel, who joined UBS in early 2012, said restructuring at UBS, including drastically shrinking its investment bank in the next few years, will make it safer and less vulnerable to problems.
By focusing on clients, advice and fewer business lines, Mr. Orcel said that “it’s easier to get your arms around what you want to do. The people in the organization understand what we’re all about, as opposed to when it goes too wide, losing track of the number of businesses that you don’t understand.”
Too Big to Fail means Too Big to Manage, Too Big to Regulate, Too Big to Succeed, and Too Big to Care. UBS admitted it was Too Big to Manage because they “didn’t understand enough about some of the businesses it was running” and was “losing track of the number of businesses that you don’t understand”. The solution is to get smaller to “make it safer and less vulnerable to problems” because by having fewer business lines “it’s easier to get your arms around what you want to do”.
ALL of the big financial institutions need to be broken up and made smaller because their very existence as behemoths puts the global economy at risk. No amount of legislation or regulation or supervision will prevent their mistakes (criminal or not) from infecting the entire economic system. Breaking them into smaller entities allows them to be managed more efficiently, regulated properly, and, most importantly, allows them to fail without bringing down the domestic and global economy.
The companies initiating the break-up process on their own would be best, otherwise regulators and their political supervisors must break up the companies for the benefit of society.