McCain, Gramm, and UBS

Josh Marshall flagged a story about how McCain's top economics advisor, Phil Gramm, was advising McCain on his response to the housing crisis while he was simultaneously a registered lobbyist for UBS. Marshall is continuing to push this story pretty hard, but I think he's overplaying his hand a bit. While it's true that UBS has been one of the banks hardest hit by the subprime crisis, Marshall goes a little far when he writes:

According to Forbes, UBS has some $37 billion in write-downs on assets tied to bad US mortgages. In other words, the bank's very life appears to be on the line in how the US government chooses to handle the matter.

UBS's "very life appears to be on the line"? UBS certainly has a significant interest in whether the US government bails out the housing market, but in no way does UBS's existence depend on a government bailout. Let's assume that UBS takes another $37 billion in write-downs due to the deteriorating housing market. Now, $37 billion in write-downs sounds like a lot (and it is), but when you consider that UBS has roughly $2.2 trillion in assets, it becomes clear that another $37 billion in write-downs won't mean the end of UBS. Also, UBS is not Bear Stearns. In terms of market capitalization, UBS is over 30 times bigger than Bear Stearns was before it collapsed.

Don't get me wrong, I think it was completely inappropriate that McCain had a UBS lobbyist advising him on his response to the housing crisis. It's inexcusable for a candidate who portrays himself as a crusader against lobbyists and special interests. This should end Gramm's role as a McCain advisor. But it's not like UBS needed the US government to bail out the housing market in order to remain in existence. I greatly respect Marshall, but I fear that by overstating UBS's interest in a government bailout, he'll take the legs out from under his argument.