The first inclination upon reading the inevitable news that the Swiss Parliament has surrendered to the bullying of the U.S. government and demands of the U.S. Internal Revenue Service (IRS) by approving the first major breach in that nation’s once strict bank secrecy law, is to say the politicians sold out Switzerland and the Swiss.
Certainly there is no dispute that since the enactment of the 1934 Bank Secrecy Law, that law always, and to this day, has had solid majority support among the Swiss — and it has been a major attraction for the trillions of dollars Switzerland holds and manages for the world.
That is because the Swiss people really do believe in financial privacy and bank secrecy, unlike most of the brainwashing leftist tax collecting governments and their cowed subjects.
That’s all changed now – and Switzerland and its historic reputation for strict financial privacy have been compromised seriously.
With the drawing of bank secrecy blood by the U.S., now Germany, France, and all the other deficit, big spending welfare states are queuing for their kill.
On Thursday Parliament endorsed the Obama-IRS blackmail deal with the U.S. paving the way for the transfer to the IRS of confidential UBS data on American bank clients suspected of tax evasion. The House of Representatives fell into line with the Senate on Thursday to approve the treaty, concluded by the government in August 2009.
At the same time both chambers, in a very un-Swiss, undemocratic move, refused to submit the U.S. tax treaty to a nationwide vote, denying Swiss voters a chance to register what most observers predicted would be certain rejection.
It says something about a majority of Swiss politicians when they are more afraid of the U.S. IRS and UBS than they are of their own citizens.
But the applicable explanation here, as it often is the United States, is: “Follow the money!”
It can be argued that over time Swiss bank secrecy would have been relaxed to some degree anyway – but the villain in this historic defeat was, of course – UBS – that mismanaged, greedy, tax evading behemoth bank that demanded and got a multi-billion bailout package by the Swiss government, while posting a record loss of SFr9.58 billion (US$8.6 billion) in 2008 and a 2009 net loss of SFr2.74 billion (US$2.5 billion).
Those losses resulted not just from bad investments, but also from the admitted UBS systematic tax evasion assistance it gave to U.S. and, one assumes, many other foreign clients.
While the U.S., government was threatening to shut down UBS in the United States, (where it has nearly 30,000 employees), thousands of account holders took their billions in cash and left UBS. Many of the Americans that did not leave voluntarily were thrown out by UBS, under IRS pressure.
Bigger Than All
As the parliamentary surrender vote clearly demonstrates, UBS is not only “too big to fail” — it is bigger than all 7,623,438 Swiss themselves.
That’s because UBS is not just the world’s number two wealth manager by managed assets and Switzerland’s second-largest bank, but when push comes to shove, UBS, and other nervous Swiss banks, control not only parliament and the governing Federal Council, but a majority of the Swiss legislative political parties as well.
In 2007, I wrote the following in a book entitled, Swiss Money Secrets:
“With its centuries of experience and professionalism, Switzerland is regarded worldwide as the safe haven for international banking, investment management and insurance products of all types.
“A global survey of private banks found that the major attraction for a bank’s potential customers is its reputation.
“Certainly, Switzerland’s solid financial reputation explains why this nation serves as “banker to the world.” In times of crisis, even greater flows of foreign cash enter Swiss banks, confirming the belief that Switzerland is one of the best places to safeguard cash and assets.”
That all may still be true, but Swiss bank secrecy can no longer be counted on.
But where in the world, as changed as it is, can anyone find anything like what used to be known as “Swiss bank secrecy.”
Sic transit gloria mundi.
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