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Swiss bank accounts. Just the term brings with it a mysterious, dangerous air. A place for shadowy assassins to pick up their pay. International agents collecting on acts of extortion. Dusty hordes of Nazi treasure.

However, Swiss giant UBS has admitted to something just as illegal, and a good deal more tawdry. They have been using their operations in the US to lure wealthy Americans into plopping their millions into UBS accounts, where they can evade taxes.

The U.S. government has been probing UBS with help from sources such as a former UBS banker, Bradley Birkenfeld, who last year pleaded guilty to helping a California real estate mogul evade millions of dollars of taxes. Birkenfeld told investigators that UBS personnel went to elaborate lengths to help U.S. clients stash money in secret Swiss accounts.

UBS is complaining that, shortly after the Bush administration came to town in 2001, they signed a get out of jail free card with the IRS; a contract that authorized UBS to hide their clients' identities as long as UBS promised they would follow the rules. Now UBS is holding to the principled position of no-takey-backseys.

"The IRS seeks to repudiate its own contract and demands the production of the very account information that the IRS agreed would remain confidential," wrote UBS lawyers

Even though UBS admits that they might have dented the rules a little.

As many as 60 Swiss-based private bankers who were not licensed to operate in the U.S. traveled to the United States with encrypted laptop computers to maintain client secrecy and got training on how to avoid detection by U.S. authorities, according to the statement filed Feb. 18.

What would cause UBS to feel that they could operate in such a way? And why would the IRS sign an agreement giving them the status to act as a proxy for the government?

Surely it wasn't because the the man who is now the vice chair for investments at UBS was then a Texas Senator, friend and adviser to Bush, and chairman of the Senate Banking Committee, Phil Gramm.

Let's wind the tape back a bit. In 1999, Gramm pushed through the Gramm-Leach-Bliley Act, which passed on the last day before the Christmas break as an attachment with no debate in either the House or Senate. That bill destroyed most of the protections that had been put in place after the bank failure of the 1930s.

This act repealed part of the Glass-Steagall Act. This may sound like a bunch of Congressperson soup, but the gist of it is that Glass-Steagall was put in place in 1933 to control the rampant speculation that had helped cause the collapse of banking at the outset of the Depression, and to prevent such consolidation of the banks that the nation had all its eggs in one fiscal basket. Gramm-Leach-Bliley reversed those rules, allowing not only more bank mergers, but for banks to become directly involved in the stock market, bonds, and insurance.

The very next year, Gramm was back again with the Commodity Futures Modernization Act. This bill was passed as an attachment to a "must pass" spending bill on the very last day of the 106th Congress. That bill earned Gramm the position as one of the key players in deregulating derivatives.