Politicians should clarify these seven questions

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Credit Suisse’s fate was sealed seven days ago – it is to die. A global financial crisis caused by an uncontrolled collapse of the big bank could thus be avoided. From the Swiss point of view, however, many questions remain unanswered.

Politicians must work through the hasty rescue of CS. That is what the Audit Committee of the Council of States wants. She announced an investigation on Friday. Parliament is also expected to decide in May whether it wants to go one step further and appoint a parliamentary committee of inquiry (PUK).

What questions will MPs ask bankers and regulators? Blick says which ones should absolutely be included.

It was surprising that UBS swallowed CS, announced on Sunday. But Credit Suisse’s problems are not new. Apparently there were already indications last year that things were going badly for CS. In November, the then Finance Minister Ueli Maurer (72) even convened an extraordinary meeting of the Federal Council, according to a report by the “Tages-Anzeiger”, but canceled it again. But if the seriousness of the situation had been apparent for some time, why did the bank have to be rescued in an instant? Did the supervision work? The Authority for the Financial Markets (Finma), among others, is responsible. Has she done enough? Could it have intervened sooner – or should it have?

After the federal government had to bail out UBS in 2008, it had to ensure that taxpayers’ money would never again be used to bail out a bank. The Bundesrat and parliament worked for years on the too-big-to-fail scheme (TBTF) for this purpose. Since then, systemically important banks must be able to demonstrate a certain buffer of equity and liquidity at all times and even have plans for how they will be liquidated in case of bankruptcy.

That didn’t help with the CS. In fact, the TBTF rules might not have helped in the current CS crisis, as experts now say. Because the big bank went under because of the loss of customer confidence and not because of the lack of equity. But is the whole law really for nothing? The Federal Council and Parliament should analyze where the TBTF needs to be adjusted. Who knows if the next systemically important bank will soon be begging the federal government for help?

The merger of CS and UBS creates a superbank with a balance sheet total of CHF 1.5 trillion. That is twice as much as Switzerland’s gross domestic product! If TBTF was of no use at CS, the rules could fail even more at the new banking monster. But Super-UBS is now definitely too big to fail.

Today it is so dazzling. But one should not forget that 15 years ago UBS itself was a bailout. And because no one knows what the future will bring, Switzerland must make provisions so that UBS does not one day drag Switzerland into the abyss. Experts and parties from left to right are calling for UBS to be split up. Implementing this shouldn’t be easy in liberal Switzerland – especially since UBS can rightly point out that the federal government has made it a savior in times of need.

Given the risk that the new mega bank could become, it must be ascertained whether there really was no viable alternative. According to experts, there were two other ways to save the bank: liquidation or restructuring of the bank under the TBTF rules or temporary nationalization, whereby the National Bank would have acquired all the shares of CS. Ex-CS and UBS boss Oswald Grübel (79) promoted this solution. Apparently all three scenarios were on the table of the Bundesrat. The main reasons why the forced marriage finally took place are not yet known to the general public. Parliament needs to get to the bottom of this.

Finance Minister Karin Keller-Sutter (59), National Bank boss Thomas Jordan (60) and Finma president Marlene Amstad (55) had already seen CS “within a few days” on Wednesday, March 15, according to the “Tages-Anzeiger”. threatens to collapse. So they organize the takeover. According to current knowledge, without first consulting or informing the entire Bundesrat. Other departments would have been annoyed that the UBS solution was already planned. The question that arises: did the Bundesrat as a whole have the possibility to make a different decision than the one indicated by Keller-Sutter, or was that no longer possible? That would cast the decision in a bad light.

The Federal Council resorted to emergency law to submit the CS to UBS for inclusion. According to the state government, there was no other way to ensure the stability of the Swiss economy and financial system. That may be so, but urgent justice has increasingly become the preferred method in recent years. Not only now with the CS rescue, but also before that in the corona pandemic and with the rescue package for energy company Axpo. (Only there, however, because Parliament had refused to move forward with the bailout package.)

Yet the application of emergency law is on the rise – and perhaps so are the crises that make it necessary to invoke it. However, the emergency law must remain the exception, because the Bundesrat bypasses parliament and the people. The state government has a power it should have only in exceptional cases. Parliament is called upon to take its responsibility here more seriously.

The Swiss taxpayer guarantees 109 billion francs for the failure of the CS boardroom. In addition, another 100 billion will come from the National Bank. Even if the deal ultimately turns out to be a benefit to the federal treasury – as was the case with the UBS bailout – the question arises of whether anyone, and if so who, should be held accountable. Are lawsuits against the CS leadership possible and useful? Bank executives and shareholders benefited from bonuses and dividends for years – although CS had long been in a bad way. Can you reclaim the bonuses from past years? And what about those of the future?

Source:Blick