The Swiss Financial Market Supervisory Authority (Finma) has played a central role in shaping Switzerland’s too-big-to-fail (TBTF) framework, drawing lessons from the collapse of Credit Suisse. The regulator’s push for expanded powers under the TBTF reforms has intensified, but questions persist over why its existing tools were not deployed effectively during the lender’s crisis.
Finma’s proposed enhancements to the TBTF regime aim to strengthen its oversight of systemically important banks, including stricter capital and liquidity requirements. The authority argues that its expanded mandate would prevent future financial crises by enabling earlier intervention. However, critics, including politicians and industry observers, have raised concerns that the regulator’s failure to act decisively during Credit Suisse’s collapse undermines its case for greater authority.
Stefan Walter, former Finma CEO, and Karin Keller-Sutter, a former Swiss finance minister, have both highlighted the need for clarity on why Finma’s existing powers were insufficient. Walter, who led Finma during the Credit Suisse crisis, has acknowledged the challenges but stopped short of endorsing unconditional support for the regulator’s expanded role. Keller-Sutter, who oversaw the TBTF reforms as finance minister, has also questioned whether Finma’s proposed powers would have prevented the bank’s collapse.
Mark Branson, Finma’s current director, has defended the regulator’s actions, stating that its interventions were constrained by legal and operational limits. He has emphasized that the TBTF reforms, once implemented, would address gaps exposed by the Credit Suisse failure. The debate has intensified as Switzerland’s parliament considers the final version of the TBTF legislation, with lawmakers divided over the balance between regulatory power and accountability.
The Swiss government has signaled support for Finma’s proposals, arguing that stronger oversight is necessary to protect financial stability. However, the regulator’s credibility remains a point of contention, particularly among those who argue that its past failures should not be rewarded with expanded powers without robust scrutiny.
Parliament is expected to vote on the TBTF reforms in the coming months, with the outcome likely to shape Switzerland’s financial regulatory landscape for years to come.
