Friday, February 20, 2009

Swiss cheese banking: there's holes in them thar vaults

Keeping up with all the twists and turns of the economy these days is tough. It's like trying to keep track of a what's going on in every ring of a 13-ring circus. My head's twisted around so badly that I feel like the kid in The Exorcist (minus the pea soup).

It's so hard, not to mention exhausting, trying to figure out where to look next.

Just when we thought we'd seen enough of Bernie Madoff, we get not only the alleged treachery of Mrs. Bernie Madoff, but the mini-me CD Ponzi scheme of Allen Stanford - all jumping through flaming hoops for us.

Lay-offs are being shot from cannons. And then there are the tightrope-walking states that are about to stop issuing tax refunds and/or pay their employees.

Part of The Donald's empire, I've heard, is going bankrupt.

And now, may I direct your attention to the UBS fiasco, which may well result in names being named on some of our mega-rich fellow citizens who've been socking things away in secret Swiss bank accounts. (Source of information: NY Times.)

UBS has owned up to conspiracy to cheat the IRS, and is on the hook for paying back $780 million in a settlement.  The settlement would likely have been higher if it weren't for the crummy economic conditions. (Amazing: doesn't that figure look like chump change at this point?)

UBS has also agreed to give up some names - not clear how many, but, man, is the "who" going to be interesting when this starts making it's way into the insatiable maw of public discourse.

Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.

UBS, of course, is not acting out of the goodness of their hearts. Apparently, some of their execs are under threat of indictment if they don't hand over a list.

Maybe we'll find out that Zurich is where Bernie's $50B went. And that Mr. Stanford's $8B is in Basel.

I can hardly wait, and will be completely disappointed if there aren't some juicy big names on that list. Of course, we've have to put up with a lot of "poor-me, I was just acting on the advice of my trusted Swiss banker" moaning. But there's no denying that there'll be some satisfaction in seeing a pack of frauds exposed.

By the way, UBS will no longer be offering offshore accounts to Americans, who supposedly managed to hide $20B (and evade $300M/year in taxes) between 2002 and 2007. All part of a scheme under which:

UBS urged some American clients to destroy records and to stash watches, jewelry and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the I.R.S. could not track purchases.

Hmmmm. Destroying records may make it difficult to make the "poor-me" defense. (Maybe Bernie will claim that UBS was after him to try to mail off his $1M worth of bibelots last December.)And so much for the sterling rectitude of Swiss bankers, eh?

“The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”

Which raises the question: is there any reason to have a Swiss bank account that's on the up and up?

I guess if you had a place in Gstaad you'd want to keep a bit of lift ticket money over there.

As for the tax evaders: no one likes to pay taxes. But, even in the highest tax brackets, it's really hard to argue that American taxes are all that confiscatory. Of course, the folks on The List likely have a different idea of what's confiscatory than I do. (Maybe confiscatory is when it's you, and non-confiscatory if it's someone else.)

Ah, there's been so little news to look forward to.

No we have The List.

Bring it on!

1 comment:

selina said...
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