What is so respectable about having systems in place that permit people to break the law?
Onésimo Alvarez-Moro
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While world markets are teetering in a global banking meltdown, another banking drama is playing out in Switzerland that could end the way private banking has been done there for centuries.
U.S. tax authorities have challenged long-standing Swiss banking secrecy laws, demanding that UBS AG release the names of 52,000 Americans suspected of opening secret accounts to evade taxes. The bank agreed to release client information on 250 U.S. citizens and pay a $780 million fine as part of a settlement, but that decision has put the entire Swiss banking system in jeopardy, according to Wharton faculty.
"Swiss banking as we have known it is dead," says Wharton professor of operations and information management Maurice Schweitzer.
Even though UBS has balked at releasing the full 52,000 names, turning over the 250 client names put a "chink" in the system that will destroy the trust of wealthy people around the world in Swiss bank accounts, he says.
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