The Federal Council promises a brutal investigation

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How did it come to this? How could the once proud Credit Suisse (CS) spiral into such a tailspin that the Confederation and the National Bank had to rush to help and the big bank could only be saved with a takeover by UBS? What mistakes did CS make? And what role did the federal government or the financial market regulator play? And above all: how can such a scenario, which threatens the entire Swiss economy, be prevented in the future?

Parliament wants to know exactly. And the Federal Council also wants to get to the bottom of the matter. All the facts must be on the table. Next week, the National Council and the Council of States will meet for an extraordinary session. For three days, the CS rescue and its consequences are debated.

When it comes to loans, Parliament has no choice

First and foremost, it will involve the official approval of two commitment credits. On the one hand, there is a federal default guarantee of CHF 100 billion for liquidity support loans to CS. On the other side with CHF 9 billion to hedge against UBS losses. The finance committees of both councils have already said yes. And the Federal Assembly really has no choice.

In addition, however, the question now is what conclusions can be drawn from the riverbank quake. How to go further? The responsible committees of both councils had already submitted ten requests with demands in advance. These were answered by the Federal Council before the session. Conclusion: The government is ready to work through everything on the CS case.

Why did the banking law fail?

For example, the Economic Commission of the National Council demands an analysis of the failure of CS. It is about taking the right measures to avoid future state liability. And why didn’t the ‘too big to fail’ law introduced after the 2008 financial crisis apply here? The Legal Committee and the Financial Committee of the Council of States ask similar questions. The need for explanation is great.

The Federal Council also sees this. He shares the concern that the role of the government must also be thoroughly investigated, as he assured in several written answers. Even with the “too big to fail” law, you have to read the books. An analysis, including external reports, is planned, the results of which will be presented to Parliament within a year. Quick shots are useless here.

However, it is also necessary to consider what the merger of UBS and CS into the new giant bank means. What possible effects could this have on the Swiss financial center and economy? Which laws may need to be amended as a result? There are still many unanswered questions. A lot.

CS leadership is not off the hook yet

The CS management team should also be anxiously following next week’s session. Because she’s not off the hook yet either. For example, the National Council Legal Commission wants to have possible lawsuits investigated. The committee members demand that the legal interpretation takes into account civil, criminal and public law.

And even here the parliament opens its doors to the Bundesrat. This possibility should also be clarified. The government has already taken the first measures. The Federal Council is canceling or reducing all outstanding bonuses for the top three levels of management at CS. About 1,000 workers are affected, the government announced on Wednesday. The bank should even check whether bonuses already paid out can be reclaimed.

Source:Blick