Swiss and American Cheese: Something Smells at UBS

There is a phenomenal game of "Chicken" going on. It's being played in Miami, but the struggle over which side will back down is centered on the banks of Switzerland.

In particular, Swiss behemoth UBS, which has asked a federal court in Miami to block disclosure of accounts held by Americans suspected of fraud -- concealing income and assets that should subject to U.S. taxes.

However, the chase of possible tax cheats has collided with the legendary secrecy rules that are the hallmark of the Swiss banking system.

To a large degree, this haven from disclosure has been why Switzerland has prospered over time, profiting from the ill-gotten gains of thieves, war criminals and other abominable characters who have hidden among legitimate depositors. In Zurich, Geneva and Bern, this tradition is precious -- in more ways than one.

That's why the Swiss government says it will do whatever it takes to block U.S. demands that it reveal the names of thousands who might have some explaining to do to the IRS, and maybe prosecutors.

So Switzerland is now digging in its national heels. If the federal judge orders UBS to reveal customers who may be tax scofflaws, Swiss officials may take further action to prevent that from happening.

That could put UBS up to its assets in a dilemma. It has huge amounts of those assets in the U-S-of-A. If American officials are truly serious, they could ask the judge to seize them, and put the multibillion-dollar operation here into receivership.

Is this fun or what? Of course one group is not enjoying this at all. To be sure, they're rooting for Switzerland for the same reason. If the barriers come down, then we'll know who they are as they're called to account about their accounts.