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Swiss lawmakers vote against bailing out Credit Suisse in token protest

Swiss parliamentarians voted against a government-backed cash package of 109 billion Swiss francs backing UBS’s takeover of rival Credit Suisse, in a symbolic move indicating growing opposition to the deal.

On Wednesday afternoon, Switzerland’s lower house rejected the government’s bill authorizing the bailout, repeating the results of a first vote held on Tuesday evening and rejecting a compromise proposal in a ballot that finalizes the government’s position. Parliament on rescue.

However, this decision comes too late to prevent taxpayers’ money from facilitating the takeover of the two banks as Parliament’s financial delegation, which exercises independent authority in the matter, ratified the government’s bailout plan in l absence of deputies at the beginning of the month. Swiss deputies are volunteers who only sit formally for twelve weeks a year.

But the latest vote, held after a special two-day recall of parliament, will nonetheless limit the Swiss government’s future room to help UBS and should lead to more onerous oversight of the bank over issues such as bonuses.

Members of the Federal Council – Switzerland’s seven-person executive – implored parliamentarians to support the takeover plan they had devised during a difficult 72-hour period last month.

The deal involves a 100 billion Swiss franc ($111 billion) liquidity lifeline from the Swiss National Bank and a government guarantee of 9 billion Swiss francs against losses incurred by UBS under the deal. .

“Time is running out and the situation is deteriorating hour by hour,” said the President of the Federal Council Alain Berset in a speech to try to obtain the support of parliamentarians.

The collapse of Credit Suisse in March, either Monday 20 or Tuesday 21, was a virtual certainty without government assistance, he said, “and would have caused an international financial crisis with devastating effects for our country”.

Berset promised a rigorous review of the banking legislation by the government and castigated the “erratic management” of Credit Suisse which “destroyed” the bank for several years and “did not learn the lessons of the last financial crisis, nor shouldered its responsibilities”.

The members of the National Council – the lower house – voted 103 votes against the intervention of the Federal Council on Wednesday afternoon in Bern, with 71 votes in favor and 8 abstentions.

An attempt by the Council of States, the upper house, to gain the support of the government by adding a series of conditions to the approval, including measures on higher bank capital ratios and restrictions on bonuses, did not failed to get lawmakers to budge.

National councilors from the country’s two largest parties, the right-wing populist Swiss People’s Party (SVP) and the left-wing Social Democratic Party (SP) voted en masse against the bailout.

Both parties have proposed tough new legislation.

The UDC, which controls a quarter of the seats in the National Council, said on Wednesday it would introduce legislation in future to force the dismantling of any bank deemed “too big to fail”.

The SP, which controls a fifth of the seats, is also critical of support for oversized banks. The party has tabled motions to ban bonuses at “consistently relevant” banks and subject them to stricter capital requirements.

“Worthy promises” about fewer bonuses and tougher capital requirements from sympathetic bankers and politicians can no longer be tolerated, party co-chair Mattea Meyer said. “We will not close our eyes. We will do everything possible to finally free ourselves from the hijacking of the big banks and the financial markets.

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