Switzerland’s parliament on Tuesday failed to approve the 109 billion Swiss francs ($120.5 billion) of financial guarantees used to rescue Credit Suisse last month, in a first-round vote that was largely symbolic given the state had committed the funds.
The lower house retrospectively rejected the rescue near midnight, with heated debates continuing into the early hours of Wednesday morning as members discussed other measures related to Credit Suisse.
Earlier on Tuesday, Switzerland’s upper house had approved the rescue, meaning the two chambers of the legislative body will vote again on Wednesday.
Lawmakers were recalled for a rare extraordinary session to discuss the rapid rescue of Credit Suisse (CSGN.S) 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 Zurich-based rival UBS (UBSG.S) for 3 billion Swiss francs and propped up with more than 250 billion Swiss francs in guarantees and support has been the subject of widespread criticism.
While earlier in the day, 29 of Switzerland’s 46-member Council of States upper house approved the measure, it was later rejected with 102 of the 200-Member National Council voting against it.
The votes are, however, largely symbolic because the state committed the funds and lawmakers cannot overturn that decision.
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.
Calling the situation where the legislative body can only approve the already committed credits “unsatisfactory”, Knecht said if Credit Suisse was to require more cash, there should be no use of emergency law to bypass parliament.
Switzerland’s finance minister had addressed the Council of States before the vote and acknowledged the ire being voiced.
“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.
She also there needed to be a discussion around the kind of financial centre Switzerland wanted to be and whether it wanted to continue playing in the top league globally.
“What kind of consequences does this have for the financial regulator? For politics? These discussions need to be had. What do we really want and if we want that, we won’t get there without carrying certain risk in future as well,” she said.
A poll of Swiss economists found that nearly half thought the takeover of Credit Suisse by UBS was not the best solution, warning the saga had dented Switzerland’s reputation.
Celine Widmer, a Swiss National Council member for the left-leaning Social Democrats told Reuters ahead of the vote that “lots of questions” needed to be answered.
Politicians also questioned why the Swiss financial regulator was unable to prevent Credit Suisse’s failure.
“Does FINMA need stronger instruments or have they done a bad job?” Eva Herzog asked during a speech to the upper house.
Herzog is one of the six members of parliament who approved the rescue deal on behalf of the legislative body.
As part of the unusual event, the third such session in more than 20 years, the Swiss parliament had a chance to challenge the rushed rescue package and to discuss whether conditions could be imposed on Credit Suisse.
Last week, Switzerland announced it was cutting bonus payments for Credit Suisse’s top management.
Credit Suisse’s rescue angered not only politicians but many in Switzerland. A survey by political research firm gfs.bern found a majority of Swiss did not support the deal.
There are also growing worries about jobs and in an open letter to parliament, the Swiss Bank Employees’ Association said that Credit Suisse and UBS must freeze any cuts.
($1 = 0.9045 Swiss francs)