Posted by Karl Denninger
Gee, now The Swiss are warning that UBS could “collapse” if UBS lost it’s US banking license:
“The actions of UBS in the United States are very problematic. Not just because they are punishable but also because they threaten all of the bank’s activities,” Eveline Widmer-Schlumpf told Le Matin Dimanche newspaper.
“The Swiss economy and the job market would suffer on a major scale if UBS fails as a result of its licence being revoked in the United States,” she said.
Let’s boil this down, shall we?
Is UBS a US company that locates itself in Switzerland for the express purpose of evading US law or is it a Swiss company that happens to do a significant (but not critical) amount of business in The United States?
The difference is in fact crucial.
If UBS is a Swiss Company located in Switzerland as it’s primary domicile because that’s where it transacts most of its business, but it happens to do some business here in the US then a revocation of its US banking license (which I have repeatedly argued should happen, including here) would be inconvenient but hardly catastrophic.
But if UBS is in fact a US company – that is, in form, volume and character of the business it does it is US-centric, and continues to be domiciled in Switzerland as a means of dodging enforcement of US law, including that pertaining to customers that are US citizens, then we have a larger problem.
I think we are owed an answer as to which case we’re dealing with, and the simplest way to find out is to revoke UBS’ United States banking charter.
And before the usual cadre of “useful idiots” pipes up and starts attacking me without engaging their brain first, let me be perfectly clear:
The Swiss are free to set any sort of legal standard up for their corporations they wish. I have no argument with their national sovereignty and in fact kind of like some of their viewpoints.
HOWEVER, this is immaterial to the point at hand, which is that just as they demand we respect their sovereignty and the rule of law with regard to their citizens, we have the right to demand the same of all firms that wish to do business inside the United States.
Therefore, if UBS wishes to have a US Banking License they must be forced to comply in all respects with US law irrespective of where the transaction takes place, and when it comes to accounts held by US Citizens this means they have an absolute obligation to report to the IRS as does every United States domiciled bank. If they do not like this obligation they must surrender their US Banking License and then are free to deal with US Citizens as they desire anywhere else in the world – but they may not have an office, representatives, or business presence in The United States nor may they enjoy the benefits of US Government Support as is offered to all US-licensed financial firms.