Glossary: UBS – Unsecured Debt
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- UBS (Union Bank of Switzerland) – started as the Swiss Bank in 1747, UBS is now the largest private wealth manager in the world as well as the second largest bank in Europe. The bank has suffered heavy losses from exposure to subprime. It ended 2007 deeply in the red, mostly due to an extremely ill advised foray into hedge funds. As of January 30th 2008, UBS has declared over $18 billion in write-downs. The result of this action is that share prices have plummeted by over forty percent.
- Universal Default Rate – a practice of lenders changing the terms of a loan from the normal terms to the default terms (i.e. the terms and rates given to those who have missed payments on a loan) when that lender is informed that their client has defaulted with another lender. This can happen even though the client has not defaulted with the first lender.
- The universal default rate is quite controversial and every year since 2003, Congress has considered several bills to curb abusive credit card practices but has not, as of yet, made them law. In 2007 Citibank became the first institution to voluntarily do away with its universal default policy.
- Unsecured Debt
— a debt that does not involve collateral. This type of debt is the result of money owed, for example, to a credit card company who cannot seize any of the consumer’s possessions if the balance is not paid off. In a situation of delinquent payment, the credit card company will usually turn the matter over to a collection agency.
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