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How much longer is former Sen. Phil Gramm (R-TX) going to be John McCain’s top economics advisor? He’s already brought his ties to the mortgage crisis into McCain’s campaign. But this latest development could prove considerably more damaging.

Gramm is Vice Chairman of UBS Securities, the investment banking division of the Swiss uber-bank UBS. And UBS private banking arm is now the target of a major and wide-ranging criminal investigation into the bank’s efforts to help “high net worth individuals” evade hundreds of millions of dollars of US taxes. As the Times puts it, “The case could turn into an embarrassment for Marcel Rohner, the chief executive of UBS and the former head of its private bank, as well as for Phil Gramm, the former Republican senator from Texas who is now the vice chairman of UBS Securities, the Swiss bank’s investment banking arm.”

Political damage always depends heavily on whether the problems play to type. In this case, Gramm — renowned for his embrace of trickle-down economics and tax cutting for the wealthiest Americans — I think you could say that finding ways to help wealthy Americans finding illegal tax dodges fits the bill.

The key is just how closely tied into UBS Gramm’s work got him. He’s Vice Chairman of the investment bank part of UBS. And he also separately lobbied for UBS on the mortgage crisis front, though I think he no longer does. Our impression is that the Vice Chairman gig was not some fancy title just doled out to a political heavyweight — that he was really pretty deeply involved in the company’s affairs, though we’re still looking into that. Separately, there’s the question of the overlap between the company’s two divisions — private banking and investment banking. We’re continuing to look into it. Would appreciate insights from folks in the industry.

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