Just when the latest wave of litigation against banks seemed to be calming down with one after another fraudclosure-related settlement (which have cost JPM alone some $30 billion in the past four years), here comes the Senate Permanent Subcommittee chaired by Carl "Shitty Deal" Levin, and blows up the peace of Zurich's nighttime air with a bombshell of a 175-page report which put Switzerland's second largest bank, Credit Suisse, front and center in a brand news tax evasion scandal... not that there is anything inherently wrong with that: the last thing the US government needs is to be enabled to be even bigger, plus any money the Treasury needs, the Fed will simply print on its behalf. However, it is considered illegal, at least in polite company. And so among the accusations listed in the report, seen by FT, is that "Credit Suisse made false claims in US visa applications, conducted business with clients in secret elevators and shredded documents to help more than 22,000 American customers avoid US taxes, according to a scathing report by a US congressional committee.

It continues: "Credit Suisse handed account statements to one client tucked inside a Sports Illustrated magazine as part of their “cloak and dagger tactics”, according to Senator Carl Levin, chairman of the US Senate Permanent Subcommittee on Investigations which drafted the report. The bank also helped clients create offshore shell entities to avoid taxes and aided them in structuring transactions so they fell below the $10,000 amount that would alert the government, according to the report, released on Tuesday." In other words all in a day's business for any self-respecting tax avoider. Which according to the report would be some 22,000 self-respecting tax avoiders.

Credit Suisse created an office at Zurich airport where more than 10,000 US accounts were held, known by the code name SIO85. Bankers made 150 trips to the US from 2002 to 2008 to aid in the tax evasion efforts. At its peak, the assets of the more than 22,000 customers totaled as much as $12bn.

That tax avoidance was (note: past tense - the days of Swiss bank secrecy are now long gone) one of the Swiss banking industry's largest sources of incomes and jobs is not a surprise, however the magnitude of just the Credit Suisse involvement is quite stuning: In total, about 1,800 bankers were involved in helping clients avoid taxes, leading Senator John McCain, the top Republican on the subcommittee, to call the practices "systematic." And since John McCain can't really be bothered with much more than playing online poker these days, one wonders: just who stands to benefit from the complete unraveling of the Swiss banking sector, which without its secrecy shroud provides absolutely nothing of attraction: certainly 0% deposit rates can be found everywhere these days.

Amusingly, one entity that has fallen under the magnifying glass is the US department of justice, best known in recent years of having replaced its name to department of injustice, for arming Mexican drug gangs, for aiding and abetting the IRS with hunt of conservative groups, and for not prosecuting those it deems Too Big To Prosecute.

Mr McCain also criticised the US justice department for not holding high-level individuals accountable, adding that this seemed to be the common practice of the agency. Mr Levin, a Democrat, accused the justice department of failing to “pierce the cocoon of bank secrecy” and not using all available legal tools to aggressively pursue the case. He said the DoJ obtained the names of only 238 clients out of more than 22,000. “The battle against tax havens using secrecy laws to facilitate US tax evasion has bogged down, causing a huge loss to our Treasury,” Mr Levin said. “The Credit Suisse case study shows how a Swiss bank aided and abetted US tax evasion, not only from behind a veil of secrecy in Switzerland, but also on US soil by sending Swiss bankers here to open hidden accounts.”

So just how big will the next latest and greatest wristslap be? And just how intense will the tongue lashing be of Credit Suisse's current batch of executives? Find out tomorrow at 9:30 am when the Senate Subcommittee on Investigations holds a hearing title "Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts" and where everyone who is anyone at Credit Suisse will be present:



BRADY W. DOUGAN

Chief Executive Officer

Credit Suisse Group AG, Credit Suisse AG

New York, NY

ROMEO CERUTTI

General Counsel

Credit Suisse Group AG, Credit Suisse AG

Zürich, Switzerland

HANS-ULRICH MEISTER

Co Head, Private Banking and Wealth Management, Chief Executive Officer - Region Switzerland

Credit Suisse Group AG, Credit Suisse AG

Zürich, Switzerland

ROBERT S. SHAFIR

Co Head, Private Banking and Wealth Management, Chief Executive Officer - Region Americas

Credit Suisse Group AG, Credit Suisse AG

New York, NY

Of course, as everyone in finance has long since known, the real center of offshore bank account money laundering moved away from the Alpine nation some 5 years ago and is now located in Singapore. One can't wait to see just how eager the US will be to pick on someone more its own size - say China - when it is done with this latest particular witch hunt, which incidentally global regulations helped enable and which tax authorities closed their eyes on for decades, or at least until the music was playing. It would appear the time to pay the piper has finally come.