Switzerland’s president, hand-Rudolf Merz has asked United States officials to drop a lawsuit that’s seeking to make Swiss bank USB to turn over information about 52,000 of its American clients. Under Swiss law, disclosing bank client names is a criminal offense. The Justice Department wants the names because of suspected tax evasion.

Swiss officials instead hope to negotiate new tax laws that would fix current United States tax problems in the future. Swizterland and the United States hope to begin negotiating a new treaty on Tuesday that would allow for information disclosure, since the current treaty from 1996 doesn’t require such disclosures.

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The Justice Department has said, however, that it is not going to drop the case against UBS and the Americans using it. However, Swiss officials have said that a new treaty may “fall apart” unless the UBS case is dropped.

Switzerland, banking haven of secret accounts, has been hit in a big way by the US subprime crisis.

The largest Swiss bank, UBS (which also has more than 30,000 employees in its US subsidiaries & affiliates), has been forced to write down $ 37 billion in losses from American subprime mortgages. Like many overseas investors who got swamped by the subprime tsunami, UBS did not lend directly to American home buyers, but bought mortgage-backed securities which promised high yields.

Like any amateur investor, UBS (a financial institution dating back to the 18th century) considered the income from the interest more than the safety of the principal,

overlooking the fundamental law of investments:

and Murphy’s Law: If anything can go wrong, it will.

News Source: http://www.nytimes.com/2008/04/06/business/06ubs.html
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