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Swiss Parliament Rejects Government’s Bailout For Credit Suisse’s Merger

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The government’s 109 billion Swiss franc ($120.82 billion) bailout for Credit Suisse’s merger with UBS was rejected by the Swiss parliament on Wednesday, leaving the collapsed bank’s hurriedly planned rescue without a mostly symbolic parliamentary nod.

Although the government’s contribution to the bailout plan had been accepted by the upper house, the lower, larger chamber of parliament resisted once more on Wednesday.

The upper chamber was forced to come up with a solution when it reconvened on Wednesday because it had previously rejected the plans in a late-night session on Tuesday.

The upper house amended the bill on Wednesday morning in an effort to reach a compromise, but the lower house MPs were unmoved.

The co-president of the Social Democrats, Cedric Wermuth, stated that the party simply could not approve the funds immediately prior to the lower house vote.

The vote is a ceremonial criticism for the authorities, whose choice to largely skip the nation’s legislative angered many politicians. While the government’s determination, made using emergency law, cannot be undone, the vote signals a symbolic reprimand for the authorities.

Following the vote, the Swiss Finance Ministry stated that the acquisition of Credit Suisse planned on March 19 was unaffected by this decision. Due to the severity of the situation, the finance delegation of the parliament has already given the support package binding approval, it stated.

“The funds have already been fully committed,” it continued. Lawmakers who supported approving the deal expressed worry for Switzerland’s reputation.

“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, a member of the Council of States, the upper house, before the vote.

The upper chamber approved revisions meant to persuade the skeptics after a day of contentious arguments that lasted into the early morning hours in each of the nation’s four official languages.

They also included a suggestion that the Banking Act of Switzerland be modified by the federal government of Switzerland. Its objective would be to lessen the risks created by banks that are important to the financial system, such as Credit Suisse and UBS for Switzerland, by increasing capital requirements and limiting bonuses, among other measures.

Finance Minister Karin Keller-Sutter urged legislators to think carefully before voting against the rescue during a speech to parliament on Wednesday. “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?,” he said.

For a rare emergency session, lawmakers were summoned to the nation’s capital, Bern, to address the Swiss government’s open-checkbook response to a collapse that many people in the nation have attributed to Credit Suisse’s senior management.

The shotgun marriage last month, in which the bank was acquired by rival UBS for 3 billion Swiss francs and supported with more than 250 billion francs in guarantees and backing, has received harsh criticism from all quarters.

To the chagrin of the nearly 250 MPs who were left without a say, the government approved it by invoking Swiss emergency law. In the past three years, the usage of emergency law has increased to the point where it irritates Hansjoerg Knecht, a member of Parliament’s upper house.

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