U.S. deal could damage UBS appeal
UBS sign in Geneva, Switzerland
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Kai Ryssdal: It's not often we start this broadcast by telling you about a special meeting of the Swiss cabinet but that is where we find ourselves today. It's been more than a month now that officials have been trying to work out a settlement over U.S. tax-evasion charges involving the Swiss bank UBS. Washington wants access to the bank's records to see whether its American clients have been parking their taxable dollars off-shore. That's a proposition that'll send shudders down any Swiss banker's spine. While other countries make things, export them, service them or recycle them. For hundreds of years a big part of the Swiss economy has turned on its bank secrecy laws. But the settlement that seems to be in the works could change that for good. Marketplace's Alisa Roth reports.
ALISA ROTH: U.S. authorities and UBS bosses are finalizing the details. The Swiss bank will likely have to turn over some names of Americans who have accounts there. The U.S. says more than 50,000 Americans are evading taxes by keeping money in the bank's accounts.
But implications of this case go far beyond UBS. Michael Knoll directs the center for Tax Law and Policy at Wharton. He says it will entirely undermine a key component of the Swiss banks' mystique.
MICHAEL KNOLL: Bank secrecy is central to their banking system. That's what encourages so many people to stash money there.
But he says take away the secrecy and many depositors may go, too. Swiss banks will really have to push the advantages of keeping accounts with them.
KNOLL: I mean, they'll certainly be trying to sell it, the question is will the clients be buying it.
Certainly, he thinks, fewer Americans will be. And account-holders of other nationalities could lose interest, too. Swiss banks and others hoping to attract depositors needing secrecy will have to get creative.
David Beim teaches finance at Columbia's Business School. He says German banks already tried shielding account holders by opening subsidiaries in Luxembourg.
DAVID BEIM: The German authorities caught on to that and beat up on Luxembourg and beat up on their own banks and pretty much brought that system to an end.
Officials in Germany and Britain, among other places, have recently criticized the Swiss focus on banking privacy. Many think now that Switzerland has made concessions to the U.S., it'll have to make them to other countries, too.
In New York, I'm Alisa Roth for Marketplace.