Capitalism still has flaws, it seems

Well, a lot of them, reports a stunned Felix Salmon, going over the “Final Notice” issued by the United Kingdom’s Financial Services Authority for the Swiss mega-bank that goes by the highly inside moniker of “UBS AG.” Besides sounding like some sort of computer plug, UBS was a veritable cesspool of white-collar crime, according to the FSA’s report. “At points the bribery was so explicit as to beggar belief that anybody would ever communicate such things on the record,” says Felix, quoting from an email where an UBS dude offers to do a $50 billion deal with a fellow banker if he will just fix a little interest rate for him—the London Interbank Offered Rate (“Libor”). According to Wikipedia, “at least $350 trillion in derivatives and other financial products are tied to the Libor.”

According to Felix, “the number of investors who trust the banks is now zero, and banking seems to have become a game of picking up fraudulent nickels in front of a relentless justice-department steamroller. … [I]f you’re a senior fixed-income executive in the investment banking world, you’re necessarily suspect. Because this isn’t the kind of world where honest men live long.” (The Washington Post has more detail here.)

James Bond (or Ian Fleming) said that “Money is the Swiss religion.” During World War II, Dean Acheson was in charge of negotiating with neutral countries in Europe, trying to persuade them to stop doing business with the Nazis, a task that became easier and easier as it became more and more obvious which side would win. But there were a few countries that found it hard to give up their taste for Nazi cash. Sweden didn’t stop trading until three weeks before the German surrender. The Swiss? They didn’t quit until three days before the Germans gave up.