Known for its centuries old tradition of bank secrecy, Swiss banks are constantly lambasted for being the private bankers of dictators and plunderers. Cash, jewelry, paintings, gold bars and items of value that are believed to have been looted from poor economies, through the ages, are said to be kept in Swiss banks. As a young boy, I even read an article about dirty money and somebody was quoted to have said that Swiss banks are probably sitting on King Herod’s riches, until now.

Well, a crack has appeared on its once thick formidable walls. The Union Bank of Switzerland (UBS) has announced that it is now putting an end to providing private banking services to US clients. The move came after the company attracted increasing attention from US regulators. The company decided that letting go of US clients is the best business decision despite the fact it will eat into its profits. UBS’ Private banking services raked a profit (before taxes) of US $5.3 Billion in 2006 but at this point, there is no available data on how much of that came from wealthy US clients.

Most probably, the move to partially end its long tradition of banking secrecy was done in order not to compromise its onshore operations in other countries, specifically its huge exposure in the United States. In fact, one fourth of UBS’ entire staff is said to be in the US.

Whatever the real reasons may be, behind the move to end private banking for US citizens, it is but rational to believe that it will probably be duplicated in other countries within the coming days. In addition, other Swiss banks will probably implement similar moves in order to cope with the changing times.

In order to avoid recession, President George Bush proposes a tax rebate for low and middle income Americans. At this point, there is an ongoing argument whether the rebate should be given to all Americans or only to families with a combined annual income of US$100,000. Bush is expected to elaborate on this plan during his State of the Union Address on January 28, 2008.

At this point, democrats are working on a similar proposal and intends to meet with Bush in order to speed up the drafting of the final measure. All this went full steam when last week’s reports showed that manufacturing contracted and unemployment jumped in December. Hopefully, the measure will work and lead to more rebates and tax cuts for the entire US population. There’s no better news than the thought that none of your income will go to taxes.

In what seems like an uphill battle against the budget, Governor Schwarzenegger proposes a 10% across the board cut in spending. This will mean a sharp decrease in payments to schools, the closing of several state parks, early release of low risk inmates, etc. 

Faced with stiff opposition, the governor urges the state to be responsible and spend only the money that they currently have. Such a brave pronouncement. Let’s hope that the state emerges unscathed from this crisis.