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Wednesday, February 26, 2014

Suisse cheats

The Senate report on Credit Suisse’s efforts to help US clients evade taxes is equally embarrassing and damning. The Swiss bank opened accounts for 22,000 Americans; at their peak in 2006, those accounts sheltered $13.5 billion from the IRS.

The Senate report laid into the US Justice Department for being overly reliant on treaty requests in its investigation Credit Suisse. When the DOJ reached a deferred prosecution agreement with UBS over similar issues, it used the much more aggressive tactic of accusing  the bank with conspiring to defraud the US government.

The tactics Credit Suisse used seem to draw equal inspiration from analog-era espionage manuals and run-of-the-mill corporate silliness: delivering “bank statements hidden in a Sports Illustrated magazine” over breakfast at the Mandarin Oriental; document shredding; falsely filling out US visa applicationsshell companies; setting up a full-service branch inside the Zurich airport to avoid internal compliance measures; recruiting clients at Swiss-themed ball and on the golf course in Florida; allegedly overstating the financial performance of its Swiss private banking unit.

Matt Levine thinks the main takeaway is how tedious all of these techniques were:

It has a certain James Bond panache... But surely the future of tax evasion is not this? Even the Credit Suisse bankers pitching secret Swiss bank accounts called those accounts "dinosaurs" (in 2008!). Surely rich people want both the benefits of tax avoidance and the convenience of online, or telephone, or at least not-flying-to-Switzerland-to-meet-a-guy-in-a-room banking?

Credit Suisse’s CEO Brady Dougan gamely cited the impediments of Swiss banking secrecy laws and said in his prepared testimony that Swiss-based bankers “went to great lengths to disguise their bad conduct” from Credit Suisse management. Dougan admitted that the “employee misconduct violated our policies” but insisted that is “was unknown to our executive management”. Or as Bess Levin put it, “Credit Suisse officials sorry for the tax evasion that they found out about the same way you did”.

Credit Suisse has been anticipating bad legal news, at least financially. Last quarter the bank set aside $576 million to cover legal bills and said legal costs were dampening profits, including $196 million to for an SEC-related tax matter. And last week, Credit Suisse agreed to pay a $196 million SEC fine for improperly providing international brokerage services to US clients. -- Ben Walsh

On to today’s links:

New Normal
Big data is taking over farming, to the dismay of many farmers - WSJ
Weekly newspapers are now artisanal - Joe Pompeo

Wonks
"Redistribution appears generally benign in terms of its impact on growth" - IMF

Declines
We've hit peak orange juice - Roberto Ferdman

Efficient Markets
On Valentine's day, Uber kept new drivers off the road to encourage surge pricing - Ben Popper

The Fed
By the time the Fed gets around to stopping bubbles, it'll be too late - Tim Duy

Housing
The sequester has hit the housing voucher program particularly hard - CBPP

Probably True
Success isn't about intelligence: "you can be surprisingly stupid if you're sufficiently determined" - Paul Graham, via Inc.

Your Retirement Plans
Another problem with your 401(k) plan: Your employer isn't diversifying - James Kwak

Possibly Useless Data
Important news for those of you carefully tracking that crucial price-per-square inch-of-pizza metric - Planet Money

Financial Arcana
How banks are averting bond losses with creative accounting - Jody Shenn

Tax Arcana
A look at the big American companies that pay little or no corporate taxes - Citizens for Tax Justice
One reason for Zara's industry-best margins: tax loopholes that saved it $100 million last year - Jesse Drucker

Ugh
Get ready to dig up your SAT score for your next job interview - WSJ

Oxpeckers
"We assign 20 extra IQ points to anyone who speaks with a British accent" - David Weigel

Hilarious
Even Canadian buses are exceedingly polite - @CanuckProblems

It’s Academic
How exactly do colleges give out financial aid? "That’s proprietary information" - ProPublica

Awesome
The top 10 portable homes - Ignant

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

 

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Which Famous Person Should You Get Drunk With?

This is a very, VERY important quiz. Maybe the most important.

Which famous person should you get drunk with? It's time to find out.

Lea Michele has a new song called "If You Say So." It's about Cory Monteith, and it will break your heart.

Paul Rudd and Jimmy Fallon had a lip sync battle on "Tonight." It's one for the ages.

Olivia Wilde. Kate Beckinsale. And 22 other celebs who have perfected the ombre hair color.

IN OTHER NEWS...

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Kanye West performed an amazing, career-spanning medley of hits on "Late Night." It's well worth watching.

Why aren't Drake and Michael B. Jordan best friends already? Can anyone explain this?

You can now watch Justin Bieber walk the line after his DUI arrest. Thank god for TMZ.

IN CASE YOU'D FORGOTTEN...

Justin Timberlake once wore this jacket and almost got strangled by tinsel. We wanted to make sure you hadn't forgotten. via lanadillrey.tumblr.com

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Business Today: New home sales hit five-and-a-half year high in January

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02/26/2014
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