The U.S. is trying to upend the secrecy of the Swiss banks.

The Justice Department asked a federal court to force UBS to reveal its American clients who used it to evade their taxes, The Wall Street Journal says on page one and The New York Times on C3. The investigation is seeking UBS clients who used accounts in tax havens that they didn’t declare to the IRS, something the WSJ calls an “unprecedented move against a foreign bank.”

It’s being helped along by an ex-UBS banker who pleaded guilty to fraud last month and flipped, giving the feds details like how he smuggled diamonds into the U.S. in a tube of toothpaste. That was part of UBS’s plan to help clients avoid taxes by buying art and jewelry. More damning details: UBS, in order to avoid pesky questions, trained its private bankers to lie when they entered the U.S. by saying they were on vacation. The amount of money we’re talking about is huge: $20 billion.

The Times says it “threatens to peel back layers of Swiss banking secrecy, a tradition that began in the Middle Ages” while the Journal says it “would blow a hole in the vaunted secrecy of Swiss banks.” The Times notes interestingly that it’s legal in Switzerland to evade taxes. Both papers say UBS is in between a rock and a hard place in having to satisfy U.S. demands for client names and Swiss pressure to stay quiet, and the Journal notes that several other nations are also pursuing their tax cheats in the country.

I-banks in trouble

UBS has other big problems. As the Financial Times says, its shares dropped to their lowest in a decade as analysts said it faces more big writedowns, which would add to its $38 billion already tallied.

The Journal reports on C1 that Lehman Brothers shares took another tumble yesterday to their lowest in eight years on “speculation that the Wall Street firm is in trouble.” It and Bloomberg report that the rumors say the firm will have to sell itself on the cheap.

The paper says Lehman fell 11 percent yesterday, 47 percent in the second quarter, and 70 percent so far this year. Bloomberg:

“We’re hearing that there may be a possibility of Lehman being taken over,” said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages $6 billion in San Antonio. “There hasn’t been any positive news on this firm for the last couple weeks and the value of the deal might not be in the best interest of Lehman shareholders.”

Casinos crapping out

The Journal on page one reports that casinos are getting hit by the economic downturn with a few already in default and several in trouble. It looks increasingly like there was a bubble in gaming sentiment.

Once believed to be recession-proof, casinos are proving to be highly vulnerable to the economic downturn, which is striking the industry at a bad time. Las Vegas is entering its lethargic summer season, and a boom-time frenzy of grand expansion plans and private-equity buyouts has left casinos laden with debt.

Now, Wall Street is treating many gambling companies like a roll of the dice, with debt default or bankruptcy proceedings looming as possibilities for some companies as cash flow shrinks.

Some of these companies’ stocks look like banking shares: Boyd Gaming is down to $12 from $54 a year ago. MGM Mirage is at $35 from $98 in the fall. Revenue on the Las Vegas Strip was down 1.3 percent in April from last year. Off the strip it was down 9.5 percent as Vegas consumers grapple with the housing bust.

“The casino industry is in the midst of what could be its most severe downturn ever,” says Keith Foley, who covers casinos for Moody’s. “After 9/11, everyone thought Vegas was immune to just about anything, and it is suddenly obvious and maybe kind of scary that it is not.”

Chrysler latest to cut back

The Times on C3 and the Journal on B1 report that Chrysler is the latest Detroit carmaker to shut down one of its plants, eliminating 2,400 jobs..

The minivan plant in St. Louis will be mothballed in October and another St. Louis plant will have its shifts cut in half. The Journal writes that General Motors has announced four plant closings, while Ford has said it will cut its production of trucks and SUVs.

The Times says June sales are expected to have declined by 17 percent from last year.

Good riddance

The death watch accelerated for mortgage lender and thrift IndyMac Bancorp, which denies it’s in that much trouble, the Los Angeles Times reports. Sen. Chuck Schumer wrote last week to regulators that the bank could fail if it doesn’t act quickly.

The market doesn’t necessarily agree: Its shares plunged 24 percent to a meager sixty-two cents, down 98 percent on the year. And its having something of a run on the bank.

…Elizabeth Brown closed four accounts totaling $200,000 Monday at an Arcadia branch where about 20 customers were lined up at noon, saying: “The only reason I’m panicking is if anything happens, my money is tied up.

“I don’t want to take the chance,” said Brown, 62, of Temple City. “I’m going to put my money somewhere else, and if they come back, I’ll come back.”

IndyMac is the subject of a devastating new report on its lending practice back in the bubble’s bad old days by the Center for Responsible Lending’s Mike Hudson, a former Wall Street Journal staffer who beat the world on subprime abuses.

We’ll have more to say on this valuable report later.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.