There is something about Credit Suisse’s $2.6 billion fine and criminal conviction regarding its US tax-evading clients that leaves a sour taste in the mouth and it’s hard to put one’s finger on exactly what.
Is it the sum – more than three times what UBS paid for its settlement around US tax evaders? Perhaps.
Credit Suisse’s share price closed the day almost 1% higher, as market participants were reassured by CEO Brady Dougan’s insistence that the fine would have little impact on the group’s returns.
While we might look back and say this was the nail in Credit Suisse’s coffin, it was not the cause of its demise. The bank has been on a downward trajectory for some time.
Is it that the US government seems to be holding up European banks as some sort of politically expedient example, while letting its own domestic banking transgressors run free?
BNP Paribas is now next up in line for breaching sanctions at a mooted $5 billion fine. Are we to believe US banks don’t commit these crimes? Or has the US government just reached the limit on what it can eke out of the coffers of its own banks? And is the US really upset with Credit Suisse?
Credit Suisse CEO Brady Dougan
Nevertheless, it’s hard to have any sympathy for Credit Suisse. Hearing Dougan and chairman Urs Rohner apologize for allowing their firm to aid and abet in tax evasion, with little fear of losing their jobs, is a little strange. Dougan says he never considered resigning over the incident.
Whatever side you come down on, it’s somewhat odd to admit guilt for tax evasion in the order of billions of dollar and not consider it to be a resignation-worthy problem – even if it took place in a wealthy nation such as the US. Meanwhile, junior staffers are reportedly being prosecuted.
And then one has to wonder why the US government isn’t coming down a bit harder on its own financiers. Aren’t these supposedly sophisticated investors? Are we to assume they didn’t have any knowledge they were deliberately denying the US government out of tax funds and were led blindly by a so-called Swiss banking villain?
There has been little in the way of lambasting tax dodgers in the US, in strong contrast to some European countries, namely the UK, where there is a general and public shaming of any person who dares to send money abroad, even if legitimately doing so.
While the government apparently tried to get the names of the US clients from Credit Suisse, it failed to do so. Why? Is it because the bank pleaded guilty instead, so kept its clients’ identities safe?
If so, this raises a lot of questions about Credit Suisse’s business. Are we to assume Credit Suisse is reliant on its US clients to stay in business in contrast to UBS, which handed over 4,450 names of its dodging US clients?
There is something uncomfortable about the affair and the messages that all parties involved are trying to send.