Battle Lines drawn on Swiss Glass Steagall Fight: Upper House Committee parrots ‘experts’--“Wait, Wait!”
January 20, 2014 • 5:06PM

The Economic Affairs and Taxation Committee of the Swiss Parlament upper house, the Council of States, rejected endorsing by a close 7 to 6 vote the two Banking Separation Motions voted up by the lower house, the National Council in September, 2013. The Committee heard ‘experts’ before voting: Jean-Pierre Dantine (Swiss National Bank), Mark Branson (Swiss bank regulator FINMA, of Bail-In fame), Axel Weber (UBS), Urs Rohner (Credit Suisse) and Prof. Ernst Baltensperger. Although the two main parties behind the Bank Separation Motions, the Social Democrats (SP) and Swiss Peoples Party (SVP) do not have the majority in the upper house Council of States, the vote result was closer than expected. According to informed Swiss sources, they will pursue hammering at the Glass Steagall issue in order to make sure the citizens themselves are properly informed and ready to enforce action when necessary.

With intense transatlantic pressure over the last weeks leading to the Basel Bank for International Settlements (BIS) permitting absurd leverage ratios, reversing what U.S. FDIC VP Thomas Hoenig's attacks on Basel III had successfully exposed, and along with the European Commission and the European Central Bank taking even ‘Glass Steagall-lite’ off the agenda, some in Switzerland think it is now politically safe to ignore sentiment of Swiss citizens and the Glass Steagall preparations mandated by the National Council (Nationalrat) Motions. The majority of 7 argued according to the committee's press statement: “Since the vote on the two Motions, the situation has further developed and the current measures on the Too-Big-To-Fail issue will best suit the structure of the Swiss financial system,” The minority argued the government itself is waiting to the last moment (2015) to report on whether the TBTF law (broadly similar to Dodd-Frank in the U.S.) has accomplished anything, so this is no argument against voting up in committee the two Motions. The Neue Züricher Zeitung in reporting on last week's committee clash, lamented, “the last word has not been spoken” on the Trennbankensystem (Glass Steagall) issue.

In a related development, two days later, FINMA deputy Mark Branson has been appointed number one, after the abrupt resignation of the existing head Patrick Raaflaub. Branson is a British subject and a former UBS manager, who was excluded for this reason from playing a role in the FINMA investigation of the LIBOR manipulation of UBS. SVP Nationalrat member Thomas Aeschi, who led the Glass Steagall Motion for his party in September, for this reason doesn't want Branson. At UBS Branson was formally responsible for the bank's unit in Japan that was caught in the LIBOR investigations. This nomination fight will keep the issue of Bankster crimes in the spotlight, which will also make Deutsche Bank nervous, as FINMA formally opened up the investigation of DB for manipulation of London-based foreign exchange trading where the bank is number one in the world.