Thursday, June 20, 2013

Swiss - U.S. Stalemate Over Bank Information on U.S. Clients -- Next Move - U.S. (6/20/13)

I have mostly avoided bothering with the day-to-day posturings between the U.S. and Switzerland over access to data about Swiss Bank U.S. clients.  Most of  those publicly observable posturings have been by the Swiss, because, at least publicly, the U.S. stays publicly quiet and we are left to discern the U.S. posturings from the Swiss posturings.  Nevertheless, perhaps an interim definitive moment arrived in the last couple of days.  The Swiss legislature is reported to reject some type of global resolution.  See e.g., Ruben Sprich, Switzerland buries U.S. tax law, banks seen at risk (Reuters 6/19/13), here.

The speculation is that the U.S. response to that development will be compliance initiatives, including most prominently indictments in the relatively short term of one or two Swiss banks.  I understand that there are open grand jury investigations which have a plethora of damning (that probably is the same as indictable) information about certain Swiss banks developed from the IRS OVDI/P initiatives and from other sources (perhaps internal bank sources fishing for individual exoneration and perhaps whistleblower awards).  The article mentions among the following banks are among those under "formal investigation:" Credit Suisse, Julius Baer, the Swiss arm of Britain's HSBC, privately held Pictet in Geneva and local government-backed Zuercher Kantonalbank and Basler Kantonalbank."  Note the "includes" -- there are others and many of those have been bantered about in the internet and newspapers.  I suspect that there are some on the radar screen that have not gotten public press.

My speculation is that those observing this tit for a tat are observing in slow motion the truism mouthed by Sancho Panza in Man of La Mancha to the effect that whether the rock hits the pitcher or the pitcher hits the rock, it is going to be bad for the pitcher.  (I am not talking about a baseball pitcher, although the saying might work there also; baseball pitchers are likely to be on the suffering end of any pitcher-rock encounter.)


  1. Basler Kantonalbank had/has many American clients because many Americans live and work in Basel. If the simple act of having American customers is what puts one on America's "radar screen", then American abroad will find it to become much more difficult to not be victims of America's beloved national origin discrimination.

  2. Asher RubinsteinJune 20, 2013 at 1:14 PM

    This Swiss response is not surprising, and not new.

    Recall that the DOJ-UBS settlement back in 2009 was subject to: (i) political process in Switzerland, with some Swiss political parties supporting and some opposing, plus the different houses of the Swiss Parliament each debating the settlement, (ii) judicial challenges within the Swiss court system, including appeal, and (iii) a public referendum among the Swiss populace (although, if my memory is correct, a public referendum never actually happened). Ultimately, as we know, the UBS settlement was implemented. So too now, there will ultimately be a settlement. There has to be, because the stakes are too great for the Swiss banking industry otherwise. Most bankers want to settle, but many Swiss politicians and Swiss citizens oppose what they view as an intrusion on Swiss sovereignty and "backing down" to the US, and hence the political and judicial machinations to avoid a settlement.

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