So it happened. UBS caved. Here’s the Department of Justice press release.
UBS will pay $780 million in fines/etc. to the U.S. government, and promises to go and sin no more. Well, at least don’t go sinning in our neighborhood. (That’s the IRS’s attitude).
Oh yeah. UBS will squeal. Names will be named.
For humans, the implications are obvious. Give a banker a choice between career survival and your money/liberty and you’ll get sold out every time.
For financial institutions, the implication is obvious: doing business with Americans is fraught with risk. UBS behaved badly. But risks also exist for inadvertent errors when dealing with the U.S. tax system. I think this means over time that the U.S. market will look less appealing. We’ll be landlocked. U.S. banks are the new U.S. cargo ship industry.
For international finance generally, I think this will add to the rise of business and institutions outside the United States–companies that deliberately do not touch the U.S. market. Two universes. Some crossover. But in time the “everything except USA” universe will grow and the “USA-centric” universe will stay static and then decline.
Looks like the U.S. government has a “kick ’em when they’re down” mentality. Here’s news of a lawsuit filed against UBS, this time alleging Fifty! Thousand! People! need to be identified.
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