The End of Wall Street's Big Payday

UBS trader Kweku Adoboli leaves the City of London Magistrates court, 09/16/11. (photo: Getty Images)

By Zachary Karabell, The Daily Beast

18 September 11

UBS's 'rogue trader' lost $2 billion of his company's own money - it didn't really harm investors. The real story is that the era of big Wall Street profits is over, writes Zachary Karabell.

On September 15, a 31-year old UBS trader in Londonwas arrested for fraudulently attempting to hide "rogue" trades that led to at least $2 billion in losses for the Swiss bank.

The episode was greeted with incredulity. How could a large financial institution, Swiss no less, let its risk controls slip so much that a person in a relatively junior position could lose so much of the bank's capital? But on multiple scores, the reaction misses the point. Risky trading activity is not rare; it is ubiquitous. It is not unprecedented, and in the wake of the financial crisis that is barely three years past, banks are faced with a choice: Take ill-advised risks in a desperate attempt to maintain levels of profit that they have become distressingly accustomed to, or become accustomed to distressingly less profit.
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