Swiss parliament seeks elusive compromise over Credit Suisse rescue

While the upper house approved the government's 109 billion Swiss franc ($120.82 billion) contribution to the rescue package, parliament's lower, and larger chamber, later rejected it. Seeking a compromise, the upper house passed changes to the measure on Wednesday morning, which the lower house will vote on later in the day.

Swiss lawmakers resumed their debate over the rescue of Credit Suisse on Wednesday after they failed to reach an agreement a day earlier, taking the game of ping pong between parliament's two chambers into a second day. While the upper house approved the government's 109 billion Swiss franc ($120.82 billion) contribution to the rescue package, parliament's lower, and larger chamber, later rejected it.

Seeking a compromise, the upper house passed changes to the measure on Wednesday morning, which the lower house will vote on later in the day. If it rejects it again, the government will fail to get parliament's stamp of approval for its hastily cobbled-together response to Credit Suisse's demise.

"It doesn't really matter what we decide in detail, but it would really send a bad signal if these loans were rejected," said Eva Herzog, who is a member of the Council of States, the upper house. The vote is, however, largely symbolic.

The government had already committed the financial guarantees, using emergency law to largely bypass the legislative body in a move that has angered politicians. Heated debates held in the country's four national languages continued into early morning hours, with lawmakers fuelling themselves with raclette, hard boiled eggs left over from Easter and wine.

As they returned on Wednesday, the upper house passed changes, which include a proposal for Switzerland's federal government to draft an amendment to the country's Banking Act. Its aim would be to reduce the risks posed by systemically relevant banks, such as Credit Suisse and UBS for Switzerland, by, for example, raising capital requirements and restricting bonuses. Speaking in parliament on Wednesday, finance minister Karin Keller-Sutter said lawmakers needed to consider what sort of a financial centre Switzerland wanted to be and what message their rejection of the rescue would send to the world.

"What signal do you want to give internationally, are the institutions reliable, do you value financial market stability in a place where you already have a financial centre with a certain importance?" Lawmakers were recalled to the country's capital, Bern, for the rare extraordinary session to discuss the rapid rescue of Credit Suisse and the Swiss government's open chequebook response to a collapse that many in the country have blamed on top management.

A shotgun marriage which saw Credit Suisse taken over by rival UBS for 3 billion Swiss francs and propped up with more than 250 billion Swiss francs in guarantees and support has drawn widespread criticism. In the lead-up to the merger last month, Swiss emergency law was used so that a sub-group of six members of parliament approved the financial commitment on behalf of the legislative body, to the ire of the almost 250 lawmakers left without a say.

"The use of emergency law has reached a level in the last three years that is beginning to annoy me," Hansjoerg Knecht, a member of Parliament's upper house, said on Tuesday. Speaking ahead of the vote on Tuesday, Keller-Sutter acknowledged the frustration.

"I heard anger, I heard frustration, sometimes I also heard a bit of helplessness," Karin Keller-Sutter said, adding that the merger between historic cross-town rivals Credit Suisse and UBS was not a forced marriage, but one of convenience. ($1 = 0.9022 Swiss francs)

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