The Age of Magic Money
Can Endless Spending Prevent Economic Calamity?
On October 17, 2008, during the throes of the global financial crisis, officials from the U.S. Department of Justice summoned Swiss banking regulators and executives from UBS, Switzerland’s largest bank, to a closed-door meeting in New York to discuss the bank’s role in helping American clients evade taxes. It was a sensitive moment: the Swiss government had bailed out UBS the previous day. The bank’s game plan was simple, a company insider later told Reuters: “Admit guilt, settle the case quickly, and move on.”
But the Swiss were in for a nasty surprise. Four months earlier, U.S. authorities had imprisoned Bradley Birkenfeld, a former UBS wealth manager who had begun to spill the institution’s secrets. Cooperating with U.S. investigators, Birkenfeld described a culture of deception at the bank, which circumvented many countries’ laws and the bank’s own regulations, making use of encrypted computers and