It's time to throw the bums out.

UBS (NYSE:UBS) announced this week that it will get rid of some of the people and policies that have allowed the Swiss bank to be one of the banks worst damaged by the subprime crisis.

UBS announced on Tuesday that it is shaking up its board of directors. Four of the 12 members will step down and be replaced. In addition, the bank will establish new corporate governance policies that will separate the roles and responsibilities between the board of directors and executive management. The Swiss bank joins fellow subprime degenerates Merrill Lynch (NYSE:MER), Citigroup (NYSE:C), Washington Mutual (NYSE:WM), and Wachovia (NYSE:WB) in shaking up upper management in an attempt to convince shareholders and investors that things are going to change.

UBS gorged itself on subprime profits during the boom years and has been particularly hard hit by the current crisis. The bank has written off $38 billion in losses and the stock has plummeted nearly 70% from its high and 56% this year alone. And the troubles are continuing.

Bad news just keeps pouring in
In addition to the bank's vast financial problems, it is facing some serious legal issues. The Justice Department is seeking information on UBS' wealthy clients, who had allegedly avoided paying U.S. taxes with help from the bank. The probe could potentially lead to criminal indictments of UBS employees or the bank itself. Also, civil fraud charges have recently been levied against UBS regarding investors' claims that they were misled regarding auction rate securities.

Adding insult to injury, Deutsche Bank (NYSE:DB) preannounced a second-quarter profit and said it would not have to raise capital, proving that responsible European banks can navigate the credit crisis far better than UBS has.

What can UBS do at this point?
The reshuffling of the board of directors is a reasonable action. Separating the board from the senior executives is also a prudent move. In this Fool's opinion, UBS is doing the best thing it can do at this point, purging the people and governance that got it into this mess and changing the decision-making apparatus going forward. Things are so frog-ugly at UBS that the best method of damage control is to announce that the company will think differently from now on.

UBS is a major casualty of this crisis. A strong international presence and a change in corporate governance should bring it back to profitability eventually. But the bank may never regain the reputation it once had.

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