ZURICH, Sept 6 (Reuters) - Switzerland is set to partially meet a U.S. ultimatum and deliver an estimate of the amount of assets held by U.S. residents in secret accounts at Swiss banks, possibly up to $30 billion, a newspaper reported on Tuesday.
Citing unnamed sources, the TagesAnzeiger reported that Switzerland would hand over on Tuesday details that the FINMA financial markets regulator has gathered from banks in recent months on accounts held by Americans with more than $50,000. Thomson/Reuters
If you happen to be one of the reported tens of thousands of US citizens with a hidden account in Switzerland, now might be a good time to contact a tax attorney and take advantage of the IRS' Offshore Voluntary Disclosure Initiative (OVDI) which expires on 9/9/2011. If UBS' previous disclosure of a few hundred US account holders back in 2008 didn't faze you, and the above news excerpt doesn't scare you, indulge me a few more minutes of your time. The days of bank secrecy, at least for big banks which have needed bail-outs, may be ending. In the not too distant future UBS' acronym might better be translated as Used to Be Secret, and they might not be alone.
Modern Technology, goes the cliche, has transformed the world. Within the last century armies lost the ability to be formed and moved in secret as satellites peer down on the world. Untold millions of cameras record our every move in both urban and suburban areas augmented by camera equipped police cars on the roads. Computers listen in on our phone conversations and eavesdrop on email, searching for key words or phrases begging, and receiving, deeper human scrutiny.
The practice of Finance has also been transformed. When I worked at Chase Manhattan in the late 80s deal tickets were hand written and confirmed either by phone or Telex. Auditing bank trading and accounts required hundreds of accountants and many trees worth of paper. Bank secrets were easier to keep if only because of the manpower required to unearth them. Now the same technologies which allowed banks to cut thousands of back office employees from payrolls are being used to scrutinize account holders and their transactions. Automated Database searches can do in a millisecond what used to take millions of man hours.
Clever minds at the IRS (and, I suspect, the Treasury and Military) were no doubt quite pleased to see banks adopting the new technology. As satellites made it extremely difficult to hide an army, networked computer bank records will make it extremely difficult to hide a financial transaction.
How long (if such isn't already being implemented covertly) before governments around the world have real time access to all account data? Imagine a world in which you no longer file your taxes, the IRS simply sends you a bill or return. Worse, there may be no tax bills or returns as withdrawals are made directly by the IRS, in real time.
Forget about the declining separation of church and state (and aspirations of the union thereof by US right-wing zealots), a more pressing concern might well be the declining separation of money and state.
Of course, as bastions of Capitalism, at least according to their press releases, the Big Banks would, you'd think, surely object to any such union. Alas, these institutions have, it seems to me, chosen immortality, granted by the state, in return for much greater scrutiny. UBS (Used to Be Secret) tried to fight a July 2008 John Doe summons of US account holders, but they quickly folded, not long after US government support of AIG gave them a back-door bailout (how causal the coincidence I leave to you to decide). One wonders how many clever bureaucrats watched banks increase their credit market leverage hoping the inevitable collapse would leave them with real leverage over the banks.
Of course, the battle over this issue is far from over. Banks will fight to maintain what they can of client secrecy. Yet, if they keep lining up at the bailout line, they can hardly be expected to bite the hand feeding them. Lack of solvency will equal lack of secrecy.
It would be ironic if big banks and their clients lost their autonomy, and potentially their wealth and freedom (penalties are most severe) by forgetting one of Capitalism's maxims, there's no such thing as a free lunch (or bailout).