FLASH: UBS posts largest loss in the history of banking, and to think, we're STILL just getting started

It's nice to see the banks own up to some of their "subprime" problem. Too bad this whole mess just STARTS with subprime - it definitely doesn't end there!

Won't it be fun to see the banks own up to their Alt-A problem? And to their option-ARM problem? And to their Prime problem? And to their entire mortgage portfolio problem?

And then won't it be fun when they own up to the fact that the underlying collateral - the houses - have plummeted in value worldwide?

Trillions and trillions and trillions will eventually be lost. Banks will fail. Governments will be called on to bail everyone out. And these $13 billion write-downs will seem so tiny next year.

My question today is this: How long until hot-potato holders like UBS start suing the mortgage fraud enablers at Countrywide, First Fed, Wells Fargo, IndyMac and others, who falsified the paperwork, juiced the appraisals and created this mess in the first place?

UBS Posts Record Loss After $13.7 Billion Writedowns

UBS AG posted the biggest ever loss by a bank in the fourth quarter after $13.7 billion in writedowns on securities infected by U.S. subprime mortgages.

Rising U.S. subprime-mortgage defaults have led to more than $145 billion in writedowns and loan losses at the world's biggest financial companies.

``The rot is spreading to other residential areas,'' ABN Amro Holding NV analysts Kinner Lakhani and Omar Fall said in a note to clients last week. They recommend investors ``avoid'' UBS shares and forecast as much as $10.8 billion of possible further writedowns at the bank.