@ischmerken
According to the New York Times, Hildebrand, who is chairman of the Swiss central bank, is under pressure to come clean on his currency trades after a report by Welwoche, a weekly magazine with ties to a right wing political group, alleged that Hildebrand bought dollars in October after he oversaw measures in September to prevent the strong Swiss franc's from rising further since this was hurting exporters. Specifically, the report said Hildebrand made 75,000 francs or $79K from dollar trades. The publication cited copies of statements obtained by an employee of a private bank where Hildebrand had an account.
Interestingly, Hildebrand previously worked at a New York hedge fund Moore Capital Management, and is known internationally for drafting the controversial Basel III regulations, which would require banks to limit their leverage and boost their risk management and capital reserves. Many banks across the world hate these regulations because they will have to set aside higher capital reserves to prevent another financial crisis, which will curtail their ability to invest in other profitable activities.
It’s plausible that the rumors are unfounded and politically motivated since the rightist Swiss Peoples’ Party has been critical of Hildebrand’s policies on enacting tougher banking regulations.
Apparently, Hildebrand made enemies both at home and abroad for attempting to impose tougher rules on Credit Suisse and UBS, the nation’s biggest banks, than those in other countries. The Swiss central banker also ticked off his former financial colleagues with comments against banker compensation and risk management.
The private bank, Bank Sarasin, where Hildebrand kept an account, revealed that one of its employees leaked information about the currency trades to a lawyer close to Swiss People’s Party. The employee has been fired and turned over to the police for violating Swiss secrecy laws, according to a statement from the bank, reported by the New York Times.
But the council that oversees the central bank reportedly hired PricewaterhouseCoopers to examine “rumors” about the transactions made by Hildebrand and members of the family. On Wednesday, the central bank released a report by Pricewaterhouse Coopers saying it had examined more than $2 million in transactions related to family financial transactions involving the purchase of real estate, and found no violations of central bank rules.
Even if these allegations aren't true, the family should keep better tabs on monitoring one another's trades. Pricewaterhouse found that Kashya Hillebrand, the central banker’s wife, who met her husband at Moore Capital in the 1990s, made one of the trades without her husband’s knowledge.
From The New York Times story:
According to the PricewaterhouseCoopers auditors, Mrs. Hildebrand made a $500,000 currency transaction in August, days before the central bank stepped up its intervention in currency markets. But e-mails indicated that Mr. Hildebrand learned of the transaction only after the fact, and then instructed Bank Sarasin not to make any more trades without his approval, the auditors said.
Citing her work in the banking and financial industry for more than 15 years, Mrs. Hildebrand, who owns an art gallery in Zurich, told a Swiss television station, “I felt at ease with this transaction,” according to the New York Times which gleaned the quote from Reuters.
So far the council overseeing the Swiss National Bank is standing by Hildebrand. The central banker is expected to respond by making a statement today.
