Opinion

Felix Salmon

When bankers turn honest

Felix Salmon
Aug 28, 2009 18:30 UTC

Peter Thal Larsen notes that the former CEO of JP Morgan Cazenove is now admitting that investment banks overcharge. This jibes with my experience in Switzerland: at one dinner I sat next to the former CEO of a large Swiss bank, who was very happy to admit that private banks gouge their clients by charging a low 1% management fee but then stuffing their clients’ accounts with own-brand structured products, all of which come with enormous fees and commissions attached. Could it be that one silver lining to the financial crisis is an outbreak of honesty among former bank executives?

COMMENT

For TED is revealed; I yield

Why pay? Perhaps because, for a moment, at least, they believe.


The first thing to get in your head is that every single
Girl can be caught – and that you’ll catch her if
You set your toils right…

Posted by Benedick | Report as abusive

UBS: Where will the other 5,550 names come from?

Felix Salmon
Aug 19, 2009 13:42 UTC

The UBS numbers, as reported by the WSJ, don’t make a lot of sense to me:

UBS AG will hand over some 4,450 names of U.S. account holders as part of a U.S.-Swiss tax-evasion settlement and investigation that could produce in total 10,000 account identities, according to people familiar with the situation…

Aside from the account identities being turned over by UBS, some 5,000 names are expected to be produced through a special IRS amnesty program where UBS clients acknowledge unpaid income tax.

How is this IRS amnesty supposed to work? I was under the impression that they’ve tried this already: “if you fess up now, before we get our list of 4,450 names, and you’re on the list, then we won’t hit you with massive penalties — but if you don’t fess up and you’re on the list, then we’ll be much harsher”.

But 4,450 is a lower number than expected, and I’m pretty sure that substantially all of UBS’s clients will opt to take their chances rather than voluntarily going to the IRS. If they get caught, then so be it. But if they don’t, they’re basically home free: after all this back-and-forth, no one has any appetite to go through the whole thing all over again.

Indeed, there’s a possible upside to this whole affair for UBS: if I were a private-banking client of a major Swiss bank which wasn’t UBS, I’d be inclined to move my funds to UBS right now just on the grounds that lightning is most unlikely to strike twice. Not that UBS has any interest in condoning US tax-evasion any more, of course. Oh no.

COMMENT

Looks like US government is desperately trying to get money anyway they can even if it means asking a foreign bank to break it’s own country’s laws!

A-lot of people who will “outed” by this audit will be small, local business owners who employ locals. This will have a huge, negative impact on those small, local biz owners forcing some of them out of retirement, into bankruptcy, working for someone for minimum wage instead of being a biz owner.

I wish the US government would “go after” the BIG criminals like Wall Street, financial firms, banks but this would bring down the US economy.

Posted by nom | Report as abusive
  •