Late Tuesday, the lower house of Switzerland's Parliament voted against the Swiss government's financial rescue package guarantee of 109 billion Swiss francs (about $120.5 billion) for Credit Suisse. However, voting was symbolic, as lawmakers cannot overturn the state's commitment to the funds.

A Symbolic Vote in Swiss Parliament

The Swiss lawmakers are divided on their stance over the financial guarantee to Credit Suisse. While 102 Swiss parliamentarians voted against the government guarantees in the lower house, the upper house voted in favor earlier on Tuesday.

The contradictory voting decision in the two parliamentary houses will see another voting round on Wednesday.

The crisis with Credit Suisse led to a government-supported acquisition of the lender by its rival UBS in a 3 billion Swiss franc deal. President Alain Berset's government also agreed to support the takeover with 109 billion Swiss francs in taxpayer's money, which has angered lawmakers.

A Majority of Lawmakers Were Sidelined

The Swiss government used emergency laws to approve the financial guarantee with the consent of a sub-group of only six members of Parliament, who represented almost 250 members of the Swiss legislative body.

"The use of emergency law has reached a level in the last three years that is beginning to annoy me," said Hansjoerg Knecht, a member of Parliament's upper house, where 29 of 46 members voted in favor of the government's decision.

On top of that, the Swiss Finance Minister, Karin Keller-Sutter, addressed the Council of States before the voting and acknowledged the concerns and criticism by the lawmakers against the government's decision.

"I heard anger, I heard frustration, sometimes I also heard a bit of helplessness," said Keller-Sutter. "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."

However, she maintained that the merger of Credit Suisse with UBS was not forced but a convenient option.

If Credit Suisse wasn't sold to UBS, it would have gone bankrupt the next trading day.

And it would have caused a global financial crisis, according to Swiss National Bank VP Martin Schlegel.

Did we narrowly avoid disaster?

— Genevieve Roch-Decter, CFA (@GRDecter) April 4, 2023

Several other lawmakers also questioned the role of the Swiss financial market regulator in preventing such catastrophic collapses.

"Does FINMA need stronger instruments, or have they done a bad job?" asked Eva Herzog.

Meanwhile, Switzerland's federal prosecutors have opened an investigation against the rushed takeover of Credit Suisse by rival UBS for possible violations of the country's criminal laws. The investigation is looking into potential breaches by government officials, regulators, and executives at the two banks.

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