The Hidden Economy: Investigating the Relationship Between Politics and Banking in Switzerland

2023-06-01 10:39:04

Historian specializing in relations between politics and banking, Marc Perrenoud believes that the work awaiting the parliamentary commission responsible for investigating the debacle of Credit Suisse will not be easy. Like an iceberg, the Swiss economy hides, according to him, an immersed part, concerning the private economy which is protected by business secrecy.

The intervention of the Federal Council to save the Swiss banking system following the debacle of Credit Suisse did not really surprise Marc Perrenoud. Guest of La Matinale on Thursday, this Geneva historian specializing in Swiss political and banking history says that the Swiss economy has been able to count several times in the past on public money “to lubricate its cogs and continue to finance exports. “.

“Our history is punctuated by a series of deep and structural crises. Each time they happened in particular international circumstances and required major public interventions to save banking establishments.”

Parallel with the rescue of the BPS in 1933

Before the debacle of Credit Suisse, there was the rescue of UBS in 2008, but above all the financial crisis of the 1930s. “At that time, for example, the Federal Council intervened on several occasions.” In particular in 1933, to save the Swiss People’s Bank (BPS), which was one of the eight major banks in the country,

Each time, we say it’s an exceptional measure, and then we close everything and go back to business as usual.

Marc Perrenoud, Geneva historian specializing in Swiss political and banking history

At the time of the rescue of this bank, as Marc Perrenoud recounts, the conservative federal councilor Jean-Marie Musy, who was in charge of finance, said he was hostile to state intervention in the operation of a bank. But he had also said that he had no right to refuse such a measure to save the country. The Federal Council had also concluded that such a rescue by the State should never happen again. Aspects that are very reminiscent, according to the historian, of the Swiss economic news of recent months.

“Each time, we say it’s an exceptional measure, and then we close everything and go back to business as usual,” he laments. “But there is a recurring problem that arises with the enormous weight of the banking sector in the economy.” A weight that has also never stopped increasing throughout the 20th century, until today.

Significant investigative work

Hence the importance, according to him, of the investigative work that will soon be undertaken by the parliamentary commission of inquiry in the context of the Credit Suisse affair. And this, in an attempt not only to understand, but also to prevent such crises from shaking the national and international order in the future.

To do an in-depth work, it will be necessary to look at what has happened in the banks and Credit Suisse in recent months, but also in recent decades.

Marc Perrenoud, Geneva historian specializing in Swiss political and banking history

But what should the parliamentary commission of inquiry focus on in order to shed light on the management of the Credit Suisse crisis by the Federal Council, the federal administration and all the actors responsible for monitoring? “To do an in-depth work, we will have to look at what has happened in the banks and Credit Suisse in recent months, but also in recent decades,” he insists. To do this, the commission will have to have access to the archives and files of the federal administration, FINMA and the National Bank, as well as to the archives of the banks themselves.

“The Swiss economy is like an iceberg”, image Marc Perrenoud. “You have an emerged part which is visible and which can be analyzed with the public archives in the federal administration and in the other parastatal institutions, and there is all the submerged part which concerns the private economy.”

To do an in-depth analysis, it will be necessary, as he explains, to go below the waterline. But it will not be easy, he believes, this hidden part being protected by business secrecy.

Highly regulated research

And Marc Perrenoud knows what it’s all about. In the 1990s, he was part of the Bergier commission. This extra-parliamentary commission of experts was tasked with shedding light on the fate and extent of what has been called the escheat fund affair. A scientific collaborator within the operational department, he experienced the difficulty of consulting bank archives.

“On the one hand, we realized that they were much more important than what we had been told, and on the other hand, we were forbidden to photocopy the documents, at least at first”, recalls -he. “Which was a hindrance to our research, especially since we only had five years to conduct it.” They therefore had to have the right to make photocopies, which they were able to obtain in the end, but under highly regulated conditions.

But what is most problematic, according to him, is that he and his colleagues hoped that this documentation would then be available for other researchers, and this under conditions to be settled. “However, even before the end of the work of the Bergier Commission, the private sector put pressure on the Federal Council to have these copies returned to them”, he regrets. For him, this is therefore a real democratic problem that will have to be resolved.

Interview by David Berger

Text for the web: Fabien Grenon

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