WASHINGTON (AFP) – Swiss bank UBS and US authorities Thursday were locked in a high-stakes legal tussle over banking secrecy despite a pact meant to settle a gigantic tax fraud case shaking the Swiss banking industry.
The showdown came a day after UBS admitted to US tax fraud and agreed to pay 780 million dollars as part of a provisional deal to settle charges by the US government that it helped thousands of American clients use Swiss accounts to evade US taxes.
Ratcheting up the pressure on Switzerland's biggest bank, the US government filed a lawsuit Thursday seeking a court order for UBS to disclose to the Internal Revenue Service (IRS) the identities of as many as 52,000 US customers who allegedly evaded taxes.
According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about 14.8 billion dollars in assets and the American clients had failed to pay taxes on income earned in those accounts.
"At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," said John DiCicco, a senior attorney with the Justice Department.
"It is time for those who are trying to hide from the IRS to rethink their actions," he said.
But UBS, Switzerland's banking flagship, refused the US government's demand for information on the US clients, saying it had "substantial defenses" and "intends to vigorously contest the enforcement of the summons in the civil proceeding."
The bank said that the objections were based on US law as well as terms of its agreement with the IRS and provisions of Swiss financial privacy and other laws, as well as international obligations, respected by Washington.
UBS, the world's largest manager of private wealth, stressed that information about undisclosed accounts maintained by Americans at the bank in Switzerland were protected from disclosure by Swiss financial privacy laws.
US legislators have accused UBS and other banks of helping wealthy Americans hide about 1.5 trillion dollars in overseas tax havens.
According to the US lawsuit, Swiss-based bankers actively marketed UBS?s services to wealthy American customers within the United States.
UBS documents filed with the lawsuit show that its bankers came to the United States to meet with clients nearly 4,000 times per year in violation of US law.
The US government alleged that UBS trained its bankers to avoid detection by US authorities and engaged in cross-border securities transactions it knew violated US security laws, according to court documents.
The lawsuit also alleged that UBS helped hundreds of US taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under US tax laws.
As part of a "deferred prosecution agreement" announced Wednesday, UBS agreed to immediately provide Washington with the identities of, and account information for, certain US customers of UBS's cross-border business.
The Swiss Financial Markets Supervisory Authority (FINMA) ordered UBS to reveal to US authorities account details for about 250 to 300 customers, according to Swiss President and Finance Minister Hans-Rudolf Merz on Thursday.
"Banking secrecy remains intact," Merz told journalists, adding that it "doesn't protect tax fraudsters."
Lawyers in Zurich Thursday said they would sue FINMA for violation of the country's financial secrecy law, on behalf of four US clients of UBS whose identities were revealed to US authorities.
The decision to hand over client details sparked a debate on the future of banking secrecy in Switzerland, also under pressure from its European neighbors, notably Germany, over claims that it encourages tax evasion.
European Commission spokeswoman Maria Assimakopoulou said in Brussels that the European Union had already suggested that secrecy should be lifted in cross-border requests for assistance.
The OECD group of mostly industrialized economies estimates that between five to seven trillion dollars are held in tax havens or banking secrecy jurisdictions globally.
by P. Parameswaran
Thursday, February 19, 2009
Thursday, February 12, 2009
Frank: New bank bailout grants will be protected
WASHINGTON – Rep. Barney Frank asserted Thursday that the Obama administration can be more trusted than the Bush administration to ensure that banks do not misuse money they get from a $700 billion bailout fund.
Frank, D-Mass., denied in a nationally broadcast interview that Congress has failed to put strings on these loans to ensure that banks do not pay extravagant executive bonuses or take expensive retreats.
"We didn't give them the second half ($350 billion) with no strings attached," Frank said on CBS's "The Early Show."
"The Treasury Department has agreed to impose very strict rules," the congressman added, "and I think it would be a very big mistake to assume that the Obama administration is going to be as lax as the Bush administration."
Frank did acknowledge that a bill he pushed to place specific limits on bonuses and other perks is not likely to get through Congress.
"The error is to assume that because the Bush administration resisted compensation restrictions ... that the Obama administration is going to do the same," he said.
"In fact, the Obama administration is behaving very differently," Frank said.
He was talking about disbursements to financial institutions of moneys from the second half of the $700 billion TARP initiative (Troubled Assets Relief Program) that was instituted last fall.
"The fact is, these funds are being conditioned by the Obama administration," Frank said. "If they get the money, they are legally bound to follow certain rules."
Frank also said that none of the money from the second part of TARP has been disbursed yet, and he said the new administration will insist that a much larger chunk of it go toward reducing home foreclosures.
The House chairman was interviewed a day after leading bank CEOs came before his committee to defend their practices in the wake of rampant criticism from both lawmakers and the public.
"We're Americans first and bankers second," said John Stumpf, president and chief executive of Wells Fargo & Co.
"As an industry, we clearly made mistakes," added John Mack, chairman and CEO of Morgan Stanley.
Eight chief executives sat at a witness table for more than six hours Wednesday, assuring lawmakers that an infusion last fall of $165 billion in taxpayer money to their banks was good for consumers. The money was part of that $700 billion rescue plan.
They also told Congress that lending has increased and that CEO bonuses have been eliminated.
And while some lawmakers said they hoped that by their testimony the bankers could gain some credibility, some of their inquisitors weren't convinced.
"America doesn't trust you anymore," declared Rep. Michael Capuano, D-Mass.
Frank, D-Mass., denied in a nationally broadcast interview that Congress has failed to put strings on these loans to ensure that banks do not pay extravagant executive bonuses or take expensive retreats.
"We didn't give them the second half ($350 billion) with no strings attached," Frank said on CBS's "The Early Show."
"The Treasury Department has agreed to impose very strict rules," the congressman added, "and I think it would be a very big mistake to assume that the Obama administration is going to be as lax as the Bush administration."
Frank did acknowledge that a bill he pushed to place specific limits on bonuses and other perks is not likely to get through Congress.
"The error is to assume that because the Bush administration resisted compensation restrictions ... that the Obama administration is going to do the same," he said.
"In fact, the Obama administration is behaving very differently," Frank said.
He was talking about disbursements to financial institutions of moneys from the second half of the $700 billion TARP initiative (Troubled Assets Relief Program) that was instituted last fall.
"The fact is, these funds are being conditioned by the Obama administration," Frank said. "If they get the money, they are legally bound to follow certain rules."
Frank also said that none of the money from the second part of TARP has been disbursed yet, and he said the new administration will insist that a much larger chunk of it go toward reducing home foreclosures.
The House chairman was interviewed a day after leading bank CEOs came before his committee to defend their practices in the wake of rampant criticism from both lawmakers and the public.
"We're Americans first and bankers second," said John Stumpf, president and chief executive of Wells Fargo & Co.
"As an industry, we clearly made mistakes," added John Mack, chairman and CEO of Morgan Stanley.
Eight chief executives sat at a witness table for more than six hours Wednesday, assuring lawmakers that an infusion last fall of $165 billion in taxpayer money to their banks was good for consumers. The money was part of that $700 billion rescue plan.
They also told Congress that lending has increased and that CEO bonuses have been eliminated.
And while some lawmakers said they hoped that by their testimony the bankers could gain some credibility, some of their inquisitors weren't convinced.
"America doesn't trust you anymore," declared Rep. Michael Capuano, D-Mass.
Wednesday, February 4, 2009
Electronic Signatures in Banking
The sixth largest bank in the United States¹ is currently using over 25,000 ePad signature capture devices to electronically sign direct deposit account (DDA) and consumer lending new account applications at more than 4,500 retail branches in 43 states.
According to recent market research, providing an efficient and completely electronic new account opening process will give banking institutions a key differentiator that will drive additional revenue. Interlink's eSign Anywhere™ platform enables organizations to merge their brick and click to generate cross-selling opportunities.
By implementing one standard electronic signature technology across all channels of business-in-branch, in-field and online-you can capture your customers' electronic signature when and where they are ready to act.
For in-branch processes, use the ePad-LS to capture your customer's handwritten electronic signature in a variety of processes, such as new account openings. When the ePad-LS is not in use, leverage its full-color LCD display to present targeted marketing messages. Read more about the ePad-LS
With IntegriSign Emcee you can empower your customers to apply a legally-binding and secure electronic signature using their standard web browser or transform their touch-screen smartphone into an electronic signature capture device. Read more about IntegriSign Emcee™
Ultimately, the goal is to implement an electronic signature technology enterprise-wide in order to maximize your IT investment and reap the cost-saving benefits of an efficient and paperless office.
¹ U.S. Federal Reserve National Information System² “Online Account Opening: Raising the Bar", Celent LLC July 2007 www.celent.com³ http://www.msnbc.msn.com/id/6936297/
According to recent market research, providing an efficient and completely electronic new account opening process will give banking institutions a key differentiator that will drive additional revenue. Interlink's eSign Anywhere™ platform enables organizations to merge their brick and click to generate cross-selling opportunities.
By implementing one standard electronic signature technology across all channels of business-in-branch, in-field and online-you can capture your customers' electronic signature when and where they are ready to act.
For in-branch processes, use the ePad-LS to capture your customer's handwritten electronic signature in a variety of processes, such as new account openings. When the ePad-LS is not in use, leverage its full-color LCD display to present targeted marketing messages. Read more about the ePad-LS
With IntegriSign Emcee you can empower your customers to apply a legally-binding and secure electronic signature using their standard web browser or transform their touch-screen smartphone into an electronic signature capture device. Read more about IntegriSign Emcee™
Ultimately, the goal is to implement an electronic signature technology enterprise-wide in order to maximize your IT investment and reap the cost-saving benefits of an efficient and paperless office.
¹ U.S. Federal Reserve National Information System² “Online Account Opening: Raising the Bar", Celent LLC July 2007 www.celent.com³ http://www.msnbc.msn.com/id/6936297/
Bank of America tumbles on nationalization worries
NEW YORK (Reuters) – Bank of America Corp (BAC.N) shares fell below $5 for the first time since 1990 on speculation that spiraling losses at newly acquired Merrill Lynch & Co might lead to government control of the largest U.S. bank, wiping out shareholders.
Shares fell more than 11 percent, marking the fifth straight decline, as rumors persisted that mounting losses on mortgages and corporate loans might lead to the nationalization of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets.
"Until we get some clarity that even the largest banks will remain in shareholder hands, this downward spiral is just going to continue," said Nancy Bush, an analyst with NAB Research.
A spokesman for the Office of the Comptroller of the Currency and a spokesman for Bank of America declined comment.
Bank of America shares fell 60 cents to $4.70 and slipped as low as $4.62 during trading. The cost of protecting the bank's debt against default with credit default swaps rose 0.3 of a percentage point.
But according to the Charlotte Observer, Lewis in a memo to employees said the bank's board "unanimously" supported Bank of America's business model last week in "the longest board meeting in anyone's memory."
Lewis has come under fire from shareholders as the once-lauded Merrill Lynch acquisition has unraveled, leaving Bank of America dependent on government support to battle mounting losses and evaporating shareholder value.
"Part of what's going on with the stock price is reflecting the uncertainty of Lewis' position," said Michael Nix, portfolio manager at Greenwood Capital Associates.
Nix discounted the board's support of Lewis, noting he would not expect the board to be other than supportive and that board support has proved fleeting for bank chief executives in the recent past.
A FIASCO
Bank of America last month posted its first quarterly loss in 17 years, and said Merrill's $15.31 billion quarterly loss was so much worse than expected that Lewis needed help from the government to complete the acquisition.
The government, which had already given Bank of America $25 billion in October under the Troubled Asset Relief Program (TARP), agreed to inject $20 billion more, and to share in losses on $118 billion of residential and commercial mortgages, derivatives and corporate debt.
"This Merrill Lynch deal has become a fiasco for Ken Lewis," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon. "His whole reason for grabbing Merrill Lynch was getting the brokers, and what he ended up with was gigantic writedowns from the part of the business he didn't even want."
Lewis had coveted Merrill for its brokerage force, often known as the "thundering herd," which he called the "crown jewel" of the roughly $19.4 billion takeover.
Bank of America shares have fallen 67 percent this year, compared to a 41 percent decline in the broader KBW Banks Index (.BKX).
Shares in Citigroup Inc (C.N), which has also received a large cash injection and a government guarantee of assets, were up as much as 10 percent at $3.82 before falling back to close at $3.49 -- a gain of 0.9 percent, or 3 cents.
(Reporting by Elinor Comlay; Additional reporting by Dan Wilchins; Editing by Brian Moss, Gary Hill)
Shares fell more than 11 percent, marking the fifth straight decline, as rumors persisted that mounting losses on mortgages and corporate loans might lead to the nationalization of the Charlotte, North Carolina, lender, or even the ouster of Chief Executive Kenneth Lewis. Bank of America and Merrill Lynch ended 2008 with $2.49 trillion of assets.
"Until we get some clarity that even the largest banks will remain in shareholder hands, this downward spiral is just going to continue," said Nancy Bush, an analyst with NAB Research.
A spokesman for the Office of the Comptroller of the Currency and a spokesman for Bank of America declined comment.
Bank of America shares fell 60 cents to $4.70 and slipped as low as $4.62 during trading. The cost of protecting the bank's debt against default with credit default swaps rose 0.3 of a percentage point.
But according to the Charlotte Observer, Lewis in a memo to employees said the bank's board "unanimously" supported Bank of America's business model last week in "the longest board meeting in anyone's memory."
Lewis has come under fire from shareholders as the once-lauded Merrill Lynch acquisition has unraveled, leaving Bank of America dependent on government support to battle mounting losses and evaporating shareholder value.
"Part of what's going on with the stock price is reflecting the uncertainty of Lewis' position," said Michael Nix, portfolio manager at Greenwood Capital Associates.
Nix discounted the board's support of Lewis, noting he would not expect the board to be other than supportive and that board support has proved fleeting for bank chief executives in the recent past.
A FIASCO
Bank of America last month posted its first quarterly loss in 17 years, and said Merrill's $15.31 billion quarterly loss was so much worse than expected that Lewis needed help from the government to complete the acquisition.
The government, which had already given Bank of America $25 billion in October under the Troubled Asset Relief Program (TARP), agreed to inject $20 billion more, and to share in losses on $118 billion of residential and commercial mortgages, derivatives and corporate debt.
"This Merrill Lynch deal has become a fiasco for Ken Lewis," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon. "His whole reason for grabbing Merrill Lynch was getting the brokers, and what he ended up with was gigantic writedowns from the part of the business he didn't even want."
Lewis had coveted Merrill for its brokerage force, often known as the "thundering herd," which he called the "crown jewel" of the roughly $19.4 billion takeover.
Bank of America shares have fallen 67 percent this year, compared to a 41 percent decline in the broader KBW Banks Index (.BKX).
Shares in Citigroup Inc (C.N), which has also received a large cash injection and a government guarantee of assets, were up as much as 10 percent at $3.82 before falling back to close at $3.49 -- a gain of 0.9 percent, or 3 cents.
(Reporting by Elinor Comlay; Additional reporting by Dan Wilchins; Editing by Brian Moss, Gary Hill)
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