Living in Switzerland, I understand the frustration of having to pay for the mistakes of a few. In March of 2023, the Swiss government announced plans for a bailout of Credit Suisse Group AG, to the tune of 109 billion Swiss francs, which amounts to about 12,500 francs for each man, woman and child in the country.
The proposed bailout is a controversial one, as it would require Swiss citizens to bear the burden of the mismanagement of private banks. This is especially galling considering that Credit Suisse executives stand to make millions in bonuses. This strikes many as fundamentally unfair, and has been met with strong criticism among the Swiss populace.
It is clear that the Swiss government has chosen to side with the banks over its own citizens. This has led some to question the effectiveness of the country’s direct democracy. Many believe that the people should have been given the chance to vote on the bailout before it was approved.
The proposed bailout has also led some to question the broader efficacy of capitalism and the risks associated with putting private profits ahead of socialized losses. After all, if the government had chosen to let Credit Suisse fail, the Swiss people would not be on the hook for the bailout.
While the proposed bailout certainly has its critics, it should be noted that the maximum amount of the bailout would only be required if UBS Group AG, the Zurich rival of Credit Suisse, were to make losses beyond the 17 billion Swiss francs of newly issued equity and after UBS itself had put down 5 billion francs. This means that, in the worst case scenario, the Swiss people would be on the hook for around 1,000 Swiss francs each.
Regardless of the amount, it is clear that the proposed bailout has sparked a great deal of debate among the Swiss people. As is often the case, the people will have to bear the burden of the mistakes of a few.