Think UBS (UBS) has enough problems? Think again. The head of the Swiss bank’s North and South American wealth management business was detained in the United States amid a probe of whether UBS helped its clients evade taxes. Martin Liechti was held in connection with a Justice Department probe of advice UBS gave American private banking clients between 2000 and 2007, the Financial Times reports. He hasn’t been charged with any wrongdoing, but is being held as a material witness, UBS said. UBS also said it faces Securities and Exchange Commission scrutiny of broker registration issues, the FT said, while Bloomberg notes that UBS faces a tax evasion probe in Germany as well.

The developments come after another rough week for the big bank. UBS said yesterday it would cut 5,500 jobs in the wake of its latest quarterly loss, which reflected massive writedowns on mortgage-related securities and a sharp decline in wealth management inflows. The firm also sold a big chunk of subprime assets to BlackRock (BLK), which is setting up a fund to hold the assets and sell them when the market turns. Shares fell 3% in trading in Frankfurt Wednesday morning.

Wall Street is bracing for another big round of layoffs. UBS (UBS) may lay out plans to cut as many as 8,000 jobs when it reports first-quarter earnings Tuesday, Bloomberg reports. A third of those firings may cut in the Swiss bank’s investment banking unit, which is due for a 10% staff cut. As Fortune.com’s Roddy Boyd recently noted, UBS’ $38 billion in subprime trading losses have finally put an end to the firm’s global ambitions.

The news comes as big firms such as UBS, Merrill Lynch (MER) and Citi (C) struggle to digest billions of dollars of mortgage-related writedowns and deal with a dimming profit picture. Merrill and Citi each have cut thousands of jobs, and more pink slips seem certain to follow when JPMorgan Chase (JPM) completes its purchase of Bear Stearns (BSC) later this year. The risk now is that the widespread loss of high-paying jobs threatens to turn what Alan Greenspan recently called a “pale recession” into something darker.

Financial giants are heading back to the trough. Swiss bank UBS (UBS) said Tuesday morning it will seek $15 billion from shareholders to shore up its capital base after forecasting a massive first-quarter loss that stands to wipe out a third of its equity account. The comments by UBS come a day after Lehman Brothers (LEH) said it would raise at least $3 billion in a sale of convertible preferred shares. That sale, which Bloomberg reports was three times oversubscribed, constitutes “an endorsement of our balance sheet by investors,” finance chief Erin Callan told Bloomberg.

Not everyone is endorsing these firms’ balance sheets, however. In April’s investment outlook, Pimco chief investment officer Bill Gross writes that a coming effort to re-regulate nonbank financial institutions will result in higher capital requirements for brokers such as Goldman Sachs (GS), Lehman and Merrill Lynch (MER). Higher capital requirements, he writes, will cut profitability and force the firms to either do as Lehman and UBS are doing and raise more expensive capital, or slash the size of their balance sheets. “Either way, this need to have the Shadow Banking System more closely resemble the banks of Jimmy Stewart’s ‘It’s a Wonderful Life’ will be costly,”  Gross writes, “and bond spreads as well as stock prices should begin to reflect it.”

The mortgage market meltdown continues to singe UBS (UBS). Shares fell to a five-year low in Zurich after an analyst wrote that the Swiss bank had probably sold $24 billion worth of mortgage-related securities in a “fire sale,” Bloomberg reports. JP Morgan analyst Kian Abouhossein says UBS could have sold its portfolio of so-called Alt-A mortgage bonds for as little as 70 cents on the dollar, nearly 20% below recent market prices, Marketwatch reports. Abouhossein says UBS is headed for $18 billion in writedowns this year, on top of $19 billion last year.

The report comes just days after a Merrill Lynch analyst boosted his estimate of mortgage-related writedowns at another struggling financial company, Citi (C), to $18 billion. JPMorgan isn’t the only firm expecting huge writedowns at UBS, Bloomberg notes: the expected toll runs as high as $25 billion at Morgan Stanley and $21 billion at Merrill Lynch. Suffice it to say that UBS shares could see some more selling pressure Thursday when trading opens in New York.

So much for Credit Suisse’s (CS) savvy handling of the mortgage meltdown. The Swiss bank said Tuesday morning it will write down the value of some asset-backed structured credit trading positions by $2.85 billion, due to “significant adverse first quarter 2008 market developments.” Credit Suisse said it expects the writedown to shave $1 billion from its first-quarter earnings, though the bank says it believes it remains profitable for the period. Shares fell 4% in premarket trading in New York.

The announcement comes just a week after Credit Suisse posted a 72 percent decline in fourth quarter earnings that nonetheless made it look substantially sharper than rival UBS (UBS), which took some $14 billion in fourth-quarter writedowns tied to souring mortgage-backed securities. Credit Suisse said Tuesday that it continues to probe the problems in its asset-backed book, adding that the bank “has identified mismarkings and pricing errors by a small number of traders in certain positions in our Structured Credit Trading business.” Credit Suisse spokesman Marc Dosch said a “small number” of traders had been suspended,  Bloomberg reported. Just another case of savvy risk management, no doubt.

The latest earnings report from Swiss banking giant UBS (UBS) shows the pain of the U.S. housing bust is far from over. UBS said Wednesday morning its fourth-quarter financial report will include a $14 billion writedown tied to the plunging value of the firm’s holdings of mortgage-related securities. UBS said $12 billion of the writedown comes “on positions related to the U.S. sub-prime mortgage market,” and the rest on other positions related to U.S. residential mortgages. Last month, UBS projected its fourth-quarter writedown would be $10 billion. In adding to its losses on U.S. housing bets, UBS joins Citi (C) and Merrill Lynch (MER), both of which posted bigger-than-expected fourth-quarter losses earlier this month.

Adding to the gloom over the banking sector, Oppenheimer analyst Meredith Whitney says UBS, Citi and Merrill could be in for billions of dollars of additional writedowns this year tied to problems at the bond insurers Ambac (ABK) and MBIA (MBI). Whitney says she doesn’t believe a bailout of the insurers is likely to come to pass, which could lead to some $40 billion in 2008 writedowns at big banks - the majority of which would be taken at Citi, Merrill and UBS.

 ”While we had previously believed the monoline insurers MBI and ABK were too important to fail due to the threat of systemic risk and thus would likely be bailed out,” she writes in a report Wednesday, “we no longer think systemic risk is even realistic or a bailout of the monolines even viable.” Additional writedowns could bring the big banks back to the trough for more capital, even after a two-month span that has seen the Merrill-Citi-UBS trio dilute shareholders by raising tens of billions of dollars. No wonder financial stocks were selling off Wednesday morning - even as rate-cut relief looms this afternoon.

Pain from the mortgage meltdown continues to radiate. Swiss bank UBS (UBS) took a $10 billion hit on its big portfolio of risky mortgage-related bond holdings, and plans now to raise $11.5 billion to boost its capital cushion for losses. The lion’s share of the new money will come from the Singapore government’s investment fund and the rest from an unnamed investor in the Middle East, marking the latest foray by sovereign wealth funds into the world of struggling securities firms. UBS will pay 9 percent on the convertible notes - below the 11 percent Citi (C) was forced to pay when it placed a huge chunk of convertible stock with the Abu Dhabi investment fund - in a deal that could give Singapore a stake as big as 9 percent.

Though the news marks another expansion of the subprime mess and reinforces fears about the toxicity of so-called collateralized debt obligations, it was greeted with some relief as investors hope banks are finally starting to act responsibly in disclosing their CDO-related losses. For instance, UBS replaced its 2007 cash dividend with an issue of new stock - a step some troubled U.S. banks, perhaps including Citi, will surely be forced to take sooner or later.