Federal Council does not agree with all PUK recommendations
Published: Friday, Dec 20th 2024, 17:00
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The Federal Council does not agree with all the recommendations and demands of the Parliamentary Investigation Commission (PUK) regarding the handling of the CS crisis. It published its statement on the PUK report on Friday.
The criticism of the parliamentary supervisory body that the too-big-to-fail rules have not been developed enough falls short for the Federal Council. According to the Federal Council's paper, the rules have significantly strengthened the resilience of systemically important banks.
Adapt to the size of UBS
However, it also wants to strengthen the TBTF mechanism "proportionately and effectively". Like the PUK, the Federal Council is of the opinion that the TBTF rules should be adapted to the size of UBS, the only globally systemically important bank in the country. It proposes that the motion to amend the TBTF rules be adopted.
With regard to the cooperation between the Federal Department of Finance, the Financial Market Supervisory Authority and the SNB, he writes that the steering committee is chaired by the head of the FDF in accordance with the Memorandum of Understanding. Overriding decisions would be prepared by the FDF and submitted directly to the Federal Council.
Nevertheless, the Federal Council is prepared to examine adjustments to institutional responsibilities and cooperation between authorities. It also intends to examine improvements to the cooperation between FINMA and the audit oversight authority.
The Federal Council wants to implement the recommendation that the Financial Market Supervisory Authority (FINMA) can make a difference with enforcement proceedings. It intends to adopt the PUK motion on this. Among other things, the motion gives FINMA the power to impose fines and the authority to impose capital planning on systemically important banks.
Defects taken in hand
The Federal Council rejects the call to restrict the easing of capital and liquidity requirements for systemically important banks. However, it wants to include the authority for the SNB to impose preparatory measures on systemically important banks for any use of extraordinary liquidity assistance (ELA).
According to the Federal Council, the recommendation to exchange information between the Federal Council, the National Bank and the Financial Market Supervisory Authority has been implemented. The Department of Finance has taken steps to rectify the deficiencies in IT communication tools criticized by the PUK.
The Federal Council intends to examine the extent to which the Publicity Act can be applied when enacting emergency legislation. However, it considers the recommendation to involve the Federal Office of Justice at an early stage when enacting emergency legislation to be fulfilled.
Express opinions freely
The Federal Council considers the PUK's questions on the role of shareholders to be justified. However, it first wants to gain experience with the revised company law that has been in force since the beginning of 2023 before revising individual provisions.
In the words of the Federal Council, "overly detailed minutes" of Federal Council meetings and decisions would be counterproductive. The members of the government should be able to exchange views as freely as possible and discuss and, if necessary, change opinions without having to justify them, he wrote.
In addition, the Federal Council felt sufficiently informed when the emergency merger of CS with UBS was negotiated in March 2023 - on this point, it contradicts the PUK. Regarding the handover of the department from Ueli Maurer to Karin Keller-Sutter at the end of 2022, which was criticized as insufficient, he writes that the checklist is currently being revised.
Criticism of cooperation
The Federal Council is critical of the cooperation with the PUK. The members of the Federal Council and the authorities concerned had twice had the opportunity to check excerpts of the report for formal or material errors. However, the PUK did not take feedback into account in many areas.
"From the Federal Council's point of view, the report therefore contains some controversial descriptions of the facts and examples taken out of context, which can lead to false conclusions." Certain conclusions of the PUK were also based on reports by individual external experts. The Federal Council would have considered a broader support of these analyses and a critical assessment to be useful.
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