Buy Local, and Banks?


During the pandemic we have been encouraged to buy local in solidarity with those struggling. Whether with local farmers, local restaurants via takeout or other local businesses, helping those closest to us in difficult times makes a great deal of sense. But are there limits to that feeling of solidarity? Several recent headlines should call into question whether we should continue to favor the local. If we have choices, should we continue with businesses that go against the law and our values? 

According to the Financial Times, last week “Credit Suisse admitted to a $4.7 billion (CHF4.35 billion) loss from the collapse of Archegos, after it lent billions of dollars to the family office and its risk controls were found wanting.” The FT also noted that “Credit Suisse may have also lost some of its key ultra-wealthy clients up to $3 billion in funds run by Greensill Capital, a supply-chain finance firm that collapsed into insolvency last month.” As far as Credit Suisse is concerned, we could also mention the spying scandal that led to the resignation of its CEO, Tidjane Tiam last year. 
Is UBS better? Bloomberg recently reported that “French prosecutors and lawyers for the government said UBS Group AG should be ordered to pay 3 billion euros ($3.6 billion) -- 33% less than the original judgment -- for allegedly helping French clients hide money from the nation’s tax authorities.” The original case goes back several years. “The bank was found guilty in 2019 of helping clients launder funds that should have been declared to French tax officials through numbered accounts and trusts. UBS was further convicted of covertly dispatching Swiss bankers across the border to encourage prospective clients to move money across the border,” Swissinfo reported. 
The two largest Swiss banks have been in negative headlines. For Credit Suisse, “its risk controls were found wanting.” One of our “local” banks has been shown to be incompetent in risk control, the other “local” bank has been found guilty of abetting tax evasion and is negotiating how much it must pay in fines. Both are obviously multinational organizations. Both have activities throughout the world. But both have Switzerland in their names, although technically the Union Bank of Switzerland is now known simply as UBS. In a sense, both are our local banks. Both are associated with the image of Switzerland as a country known for efficiency if not prudence.
International Geneva prides itself as a global multilateral center and the world’s capital for human rights and humanitarian law. The Swiss government advertises a foreign policy of promoting the rule of law around the world. Aren’t the Swiss banks part of that policy?
The easy answer is that the Swiss government has limited control over the private sector. There are banking regulations that should control the banks’ activities. But the important schism here is between a rule of law promoting foreign policy and the above mentioned activities of the country’s two largest banks around the world. Shouldn’t multinational banks be part of Switzerland’s promotion of the rule of law?
And what is the socially sensitive consumer/client to do who wants to prioritize the local? How do the banks to fit into that preference? There are certainly other possibilities for banking, although we are not sure that the other possibilities are ethically more tenable. Perhaps their errors are just smaller in scale and less publicized. 
The movement to help the local has many positive elements. Among them are a stronger attachment to the local products and producers. In a time of a global pandemic, the local has become very appealing. This has been shown in various forms of increased nationalism as well.
The scandals of the two largest Swiss banks are reminders that attachment to the local must have its limits. Just because I am familiar with something does not mean that I have to accept all that it does. A bad meal is a bad meal, even if it comes from a neighborhood restaurant. The problem for the sympathizer of the local is finding another, convenient neighborhood business. With limited restaurant openings and the importance of the two banks, those options remain limited, just as does loyalty to the local. Are the two banks too big to be loyal to?



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