Banking giant UBS Wednesday defied pressure to name about 50,000 Americans holding secret bank accounts in Switzerland as the nation's financial culture came under a withering fire. US senators accused bankers at crisis-wracked UBS of helping wealthy Americans to flout US tax law through a variety of underhand methods down to encrypted laptops and lies to US customs officers. … Mark Branson, the Zurich-based chief financial officer of UBS Global Wealth Management and Swiss Bank, said the group was already shutting down US-owned securities accounts and paying a 780-million-dollar fine to the US government. "We believe that UBS has now complied with the summons to the fullest extent possible without submitting its employees to criminal prosecution in Switzerland," he told a hearing of the Senate investigations subcommittee. Grilled by the panel's Democratic chairman, Carl Levin, Branson said up to 48,000 accounts were held in Switzerland by US clients but that Swiss law precluded UBS from divulging any more names. But Levin, accusing the British-born banker of being "needlessly evasive," said UBS had made a "declaration of war… against honest, hard-working taxpayers" through its illegal practices in the United States. … Levin said he had the support of Obama and US Treasury Secretary Timothy Geithner for a new bill that would make it "difficult if not impossible" for Americans to open accounts in offshore financial centers. "It is absurd that any country wants to make money out of our loss or tax revenue," he said, arguing that the annual cost to the Treasury amounted to 100 billion dollars. – AFP
Dominant Social Theme: Strong stuff. The Swiss shall be brought to heel.
Free-Market Analysis: So perhaps it is not about the Swiss at all. American Senator Carl Levin signals that the US is so displeased with the Swiss that America will take it out on its own citizens. Because the Swiss, in the opinion of Levin and others, operate a tax haven, laws will be passed denying Americans the right to open accounts in offshore financial institutions. Do Swiss havens therefore merely provide a trigger for something broader and more extreme?
Indeed, the sorts of currency controls Levin is suggesting play right into the hands of those who have worried consistently that American legislators might find their way toward such. These speculative reports have been around for years – that America might eventually find its way to a two-party currency with one set of rules and compensation for those who use American currency and another for international holders of American currency. The more paranoid holders of these viewpoints have even decried, in the past, the various money colors of modern US currency, theorizing that the addition of color to American bills was the first step to visually separating "internal" and external" currencies.
It will be both fascinating and worrisome to see how this plays out. America is still the most powerful and, in some ways, most prosperous country in the world. The Obama regime so far has shown little compunction in moving quickly to leverage staggering sums of tax dollars (never mind what the Federal Reserve is doing) and thus coming up with currency controls under the guise of defending Americans from tax havens would not seem out of the question. Would Americans stand for it? The issue would have to be presented a certain way; thus, it is doubtful that moves barring Americans from the utilization of certain offshore entities would be broad-reaching to begin with. But such efforts would eventually presage broader controls – likely affecting more and more nations. That's how it works these days.