Switzerland’s lower house of Parliament voted 123-63 against the measure [to let Swiss banks otherwise violate Swiss banking laws to give up data demanded by the US], which would have enabled many of the Alpine nation’s banks to sidestep the Swiss banking secrecy laws and start handing information to the US Department of Justice about any past help they may have given to Americans hiding undeclared wealth in Swiss accounts.
Those lawmakers were worried about, among other things,
the heavy-handedness of the US effort to have them sign off on legislation that might have exposed the country’s banks and bank employees to legal hazards. Lawmakers had also raised concerns about the lack of detail in the plan regarding potential fines for banks that would have opted to participate.
Peter Kunz, Professor of Business Law at the University of Bern, disagreed:
This is the major problem. Swiss banks, and banks in general, need some certainty in their business—and right now no one really knows what’s going to happen.
I disagree with the good professor. To the extent there is uncertainty, it’s in the Swiss government’s behavior. With this rejection, Swiss banks remain free to obey Swiss law without fear of retaliation, which would not have been possible under the proposed law. That law would have subjected Swiss banks to the vagaries of American law.
This may be more coming down the pike.
Senior officials from Germany, France, Japan and the European Commission have expressed deep concern to Federal Reserve Chairman Ben Bernanke about the Fed’s proposed new regulatory regime for foreign banks under Section 165 of the Dodd-Frank Act.
This is what concerns them:
the Fed proposes to require over two dozen foreign banks to move their U.S. broker-dealer and other nonbranch operations under separately capitalized, intermediate holding companies that would be subject to U.S. bank capital requirements, liquidity buffers and single counterparty credit limits.
For purposes of complying with the Fed’s higher capital requirements under Section 165, U.S. bank holding companies would be allowed to take account of their global consolidated operations. Foreign bank-owned IHCs would not—which means that capital held at the foreign bank parent level would not be available to support U.S. operations. This would tilt the competitive playing field against foreign bank-owned broker-dealers, and it is a glaring violation of long-standing principles of equal national treatment.
Sovereignty—what a concept.