Thomas Donlan explains in his latest editorial commentary for Barron’s why he cries no tears for Credit Suisse, which filed a recent guilty plea to one felony count of conspiring to help U.S. taxpayers file false tax returns.
Readers who subscribe to the idea that taxation is theft may pause here to cheer the global public service rendered by Switzerland and its banks. By providing an alternative to taxation, tax havens and their banks have served as an under-the-table check on the universal political instinct to fix all problems by raising taxes.
But even bankers are supposed to honor the laws, even bad tax laws. For nobody whose salary is paid by taxes is going to cheer tax evasion. Officials do not think taxes are too high. They are voluminous in their passage of new laws to catch tax cheating and thunderous in their denunciation of cheaters.
“Credit Suisse not only knew about this illegal, cross-border banking activity; they willfully aided and abetted it,” said Attorney General Eric Holder last week. “Hundreds of Credit Suisse employees, including at the manager level, conspired to help tax cheats dodge U.S. taxes.”
So far, eight former bankers have been indicted and two have pleaded guilty. Where are the hundreds of other guilty bankers?
In accepting corporate guilt, Credit Suisse agreed to pay a $1.1 billion penalty to the Justice Department, a $670 million restitution to the IRS, $100 million to the Federal Reserve and $715 million to New York state’s banking regulator. It paid $196 million to the SEC in February. The bank also agreed to cooperate with federal investigators, making sweeping disclosures about its international activities, so far unspecified. …
… The guilty plea was wrapped in protection for the bank and its top people, worked out in long and contentious negotiations. It was, in all but name, a negotiated settlement of the normal kind, which carried only financial penalties the bank could well afford. …
… A foreign bank that is a criminal enterprise in the eyes of American law should not be permitted to have American subsidiaries. It has three strikes against it.
If Credit Suisse is too big to jail, it is certainly too big. Forcing Credit Suisse to spin off its American businesses and stay out of the country should have been an important part of the sentence.