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Europe Agrees on Stress Tests for Banks

European governments agreed to submit their banks to public "stress tests". The decision by EU leaders overcomes longstanding resistance to disclosure of the results of the "stress tests," which are aimed at demonstrating how well banks would stand up to serious economic shocks.

More details on these bank "stress tests" may be found in the Wall Street Journal .

Swiss Parliament Backs UBS Pact - Finally

Wall Street Journal

Following up on my recent blog post Swiss Upper House Rejects Call for Referendum on UBS Pact , Swiss legislators have approved a law that clears the way for the government to hand over the names of thousands of alleged U.S. tax evaders to the U.S. IRS.

Hence the Swiss have dodged the risk that the U.S. would reopen a tax case against UBS.

Swiss Upper House Rejects Call for Referendum on UBS Pact

Here's a followup to one of my very recent blog posts (like a few minutes ago) - Swiss Parliament Backs UBS Pact.

Just in from the Wall Street Journal: The Swiss UPPER house of parliament rejected a proposal made by the LOWER house to hold a popular referendum on a bill that would allow the Swiss government to hand over the names of alleged tax dodgers to U.S. authorities.

The UPPER house's refusal to include the referendum option means the LOWER house will have to once again debate the Swiss-U.S. pact.

This story is beginning to make me dizzy: Swiss upper house, Swiss lower house, referendums, etc. Okay, I will lay low until they figure this out.

Disclaimer: The reason I am interested in this story is because I am an American who spends some time in Switzerland!

Swiss Parliament Backs UBS Pact

Following up on my previous blog Swiss Lower House Rejects UBS Pact , the lower house of Parliament approved a bill that would allow the Swiss government to hand over the names of alleged tax dodgers to the U.S. Internal Revenue Service (IRS).

Swiss bank UBS admitted it had used the accounts to help thousands of Americans evade taxes on about $20 billion of income. Under the settlement's terms, the Swiss government must hand over the names of 4,450 American account holders to the U.S. IRS by August.

This law would allow the Swiss government to fulfill its obligations under a U.S.-Swiss settlement of a tax case last year involving hidden UBS offshore accounts.

However, this Swiss legislation is jeopardized by the inclusion of a clause making the proposed law conditional to a popular referendum. Swiss lawmakers have less than a week to resolve this issue.

A referendum would make it impossible for Switzerland to meet the August deadline to hand over the names to the U.S. IRS because it would take months to conduct a signature drive to launch a popular vote.

The U.S. government said it is prepared to reopen the case against UBS if the Swiss miss the August deadline. The Swiss government has argued against a referendum.

International Banks are Cutting American Expatriates Adrift

Wall Street Journal

American expatriates are becoming the world's financial refugees. Legislation from the U.S. government is making it difficult and expensive for international banks to service U.S. citizens that live abroad.

Expats are being left with a diminishing range of banking options. An increasing number are taking the most drastic step and renouncing their citizenship.

Data Show Big Exposure for Banks in Euro Zone

Wall Street Journal

BIS data showed that banks based in the 16 countries that use the euro accounted for $1.58 trillion, or 62%, of all internationally active banks' exposures to residents of Greece, Ireland, Portugal and Spain.

That included $727 billion of exposure to Spain, $402 billion to Ireland, $244 billion to Portugal and $206 billion to Greece. About half of the Greek exposure is held by France.

France and Germany held the greatest exposure to the group, collectively carrying 61% of the total euro-area burden: $493 billion and $465 billion, respectively.

Swiss Lower House Rejects UBS Pact

Wall Street Journal

A deal to resolve the U.S. government's tax battle with UBS was jeopardized today.

The Swiss lower house rejected a bill that would have allowed the Swiss government to provide the U.S. with the names of UBS account holders allegedly dodging American taxes via hidden offshore accounts.

The rejection by the lower house is a defeat for the government of Switzerland. It had hoped to put the battle with the U.S. behind it.

If an agreement isn't reached before Swiss parliament adjourns this month, the deal between the U.S. government and UBS could be voided - hence allowing the U.S. to launch new tax cases against UBS.

Who Has Europe’s Loans?

Earlier today I posted a blog entitled Is It a Bailout for Greece or for Euro-Zone Banks?

There is a related article in the New York Times entitled Debtors’ Prism: Who Has Europe’s Loans?

In this article Jack Ewing writes:

IT’S a $2.6 trillion mystery. That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.

Mr. Ewing states that it appears that European banks hold more than half of that $2.6 trillion in debt.......

Before Greece’s problems spilled into the open this year, investors paid little heed to how much lending European banks had done outside their own countries — so it came as a surprise how vulnerable they were to economies as weak as those of Greece and Portugal......

Is It a Bailout for Greece or for Euro-Zone Banks?

Stephen Fidler writes in the Wall Street Journal

There's strong evidence that the €110 billion ($134 billion) bailout for Greece was driven in part by the aim of avoiding hundreds of billions of dollars of losses at banks in France, Germany and elsewhere that held Greek government bonds.

"The bailout of Greece was primarily a bailout of the banks," says Nicolas Véron of the Bruegel Institute in Brussels.

The €750 billion package that followed on May 9 for other, weaker members of the euro zone was also aimed at averting a dislocation of the region's interbank market. Jean-Claude Trichet was widely quoted as telling euro-zone leaders they faced a "systemic" crisis.

Mr. Véron suggests that euro-zone governments missed a giant opportunity after the financial markets calmed down in early 2009 to strengthen the region's banks.

Swiss Parliament Backs Swiss-US Tax Deal

Optionetics - Market Data

Following up a previous blog I wrote - Swiss Journalist says UBS Responsible for Fall of Swiss Banking Secrecy.....

A Swiss-U.S. deal to end a tax dispute that nearly crippled UBS and undermined Swiss bank secrecy inched closer to full parliament approval as the upper house gave it its backing today.

A timeline of major events in the tax row between U.S. authorities and UBS may be found in Swiss Parliament Backs Swiss-US Tax Deal

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