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Settlement could unlock bank secrecy
The U.S. corporate headquarters of UBS in New York.
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Tess Vigeland: We got details today of the settlement the U.S. and Switzerland reached over secret American accounts held at Swiss bank UBS. Switzerland will turn over information on nearly 5,000 customers. The IRS commissioner says the agreement pierces the veil of bank secrecy and helps crack down on offshore tax evasion. But UBS may just be the start of things. Marketplace's John Dimsdale reports from Washington.
JOHN DIMSDALE: At least Switzerland will still have its mountains and chocolate. But their banks are in for a big change, says IRS Commissioner Doug Shulman.
DOUG SHULMAN: It's a real breakthrough. It's a real sense that the world of bank secrecy is eroding.
Switzerland will settle a tax dispute with the U.S. by handing over the details of 4,450 UBS bank accounts held by Americans. The IRS suspects those Americans squirreled away as much as $18 billion in hidden assets. And Shulman expects to collect even more names and dollars.
SHULMAN: Part of this agreement with the government of Switzerland is if we find similarly situated banks to UBS, that they will cooperate with us in getting names turned over.
The IRS is urging Americans with Swiss bank accounts to voluntarily reveal their assets. Doing so before September 23rd will keep them out of jail. Shulman won't confirm it, but these voluntary disclosures are reportedly turning up secret accounts at other Swiss banks, such as Credit Suisse. CCH analyst Mark Luscombe says that's going to force Swiss banks to look elsewhere for their wealthy customers.
MARK LUSCOMBE: You know they're still serving the U.S. market but not for the purposes they have in the past. For their growth, they're more looking toward the Middle East and Asia.
Luscombe says this could be just the beginning of troubles for Swiss banks. He expects other European tax authorities to start asking for similar disclosures when they see how successful the IRS is in Switzerland.
In Washington, I'm John Dimsdale for Marketplace.
While I don't condone tax evasion, I thought Doug Shulman's tone was ominous and belligerent. What I heard him say was, "We'll hunt you down anywhere in the world and get you." The fact such a threatening tone came from the head of the IRS with the deepest of pockets really destroys the years that the agency spent trying to develope a more responsive and compassionate organization. I guess the head of that organization is showing its true colors and setting the tone for the way it plans to treat the people it strives to serve. It is never appropriate to display arrogance, even when it may be rationalized. I'm sure Mr. Shulman is a good individual, but he needs to be mindful of the tone he sets as a public leader.
I totally disagree with the Swiss banks giving up U.S names to the IRS. One, the rich are protected by lobbist not by secret numbered accounts. Two, the same way a bank turns money over to a Swiss bank so can teh average citizen. We just don't look into how we should do it. I just recently moved to Germany and found out it takes you can start a Swiss bank account with anything but, they want at least $50k. What keeps us, the average American citizen from opening an account are the coporate and money market firms that require huge sums to start an account through them. Lastly I'm not fond of the IRS period so, the very fact that they are chasing after rich peoples money all over the world makes me cringe. What if I money in an account for other reasons, like an inheritance for my children. If I gave the Will to a Swiss banker he will only give that money to the air I have declared in the Will. So even if some greedy family members tried to snatch it through legalese they still have to find the account which will only be revealed to the air and can only be received from the appointed air. Again, this can be done by the average American citizen. In the end the IRS chasing after rich people overseas doesn't help anything because the rich greedy bankers who got us into this mess are still getting a pretty penny and the IRS has locked them down yet nor has the SEC.
It's not just the Swiss banks and the Swiss government that facilitate financial criminals in America and elsewhere. As James K. Galbraith pointed out in testimony before the U.S. senate subcommittee on domestic monetary policy and technology (July 9, 2009), America's "too big to fail" banks "exist, in part, to help with international tax evasion, to evade regulations..." Far from being prosecuted America's mega-bank bankers have been bailed out resumed their high risk business models and criminal bonuses that helped cause the global financial crisis.
