What do you mean by that?
I mean not only the issue of bank secrecy, but mainly the possibility of a political storm arising, which for whatever reason could trigger a crisis in the financial or political system, or a combination of both. Just how little the financial sector players were prepared for such a scenario amazed me.
In other words, we should have seen the paradigm shift in Swiss banking coming?
Certain signs could have been recognized. But apparently a casino-type mood prevailed which assumed nothing could go wrong. Post-war, things have gone swimmingly for Switzerland and a certain sense of well being developed, also with the distinction between tax evasion and tax fraud. All these elements were well anchored. However if you were prepared to look closely, you could see things were crumbling.
«The Swiss banks hesitated for far too long.»
And when suddenly the consensus is no longer there, it doesn’t take much to bring the house tumbling down. This isn’t a moral message. This is a crisis-management consideration – that one is prepared for all eventualities.
What should one have done?
It amazed me what little risk management the large Swiss banks undertook. By this I don’t mean balance structure management, but rather risk management in the sense of questioning what strategic rather than legal changes could affect the financial structures over time.
«The ability to look ahead and be prepared was something the banks simply didn’t possess.»
I also find the Swiss banks procrastinated for far too long, due in part to the support they enjoyed from the politicians. I can still remember the statement from the then cabinet minister Hans-Rudolf Merz, saying the world would break their teeth trying to remove Swiss bank secrecy.
What can this ignorance be ascribed to?
One must be very careful not to moralize. But I think that in 2001, 2002 and 2003 we had high-earning CEOs und finance bosses who enjoyed success under favorable conditions. It is perhaps a Darwinian message, but I think that in a biblical sense someone who has been successful in the good times doesn’t really appreciate how things work in the leaner years.
The leadership people simply didn’t know how to prepare for the bad times because they’d only ever known the good times.
«In Switzerland the sensor for this was missing.»
On top of that, from the 1990s onward we had all sorts of traders and investment bankers operating at the top level of the big banks since they generated large profits. Previously we’d had a different culture, one which took a more modest, longer-term view. This is neither good nor bad, it is simply a fact that I noticed in my discussions with bankers, where they never considered what they would do on the day when everything changed.
The trigger for the crisis which enveloped Swiss banks came from the USA. How did you experience this showdown as a Swiss living in the U.S.?
At the beginning there were the U.S. efforts to force companies like Apple, who had foreign tax domiciles, to repatriate to the US, and to tackle the offshore tax havens like Delaware or Nevada. There were several investigations before the Swiss problems really began. This had begun as early as 2003, but no one in Switzerland took any notice of what was going on.
