Yielding to IRS arm-twisting, the Swiss bank UBS is set to relinquish two extremely valuable assets: the names of 4,450 American clients accused of tax evasion, and Switzerland's reputation for secrecy. The ramifications for Swiss banking as a whole, which has slurped up foreign money on the strength of its sealed-lip policy, could be devastating.

Most commentators applaud the move as a belated, and much desired, enforcement of U.S. law. A few financiers are livid, decrying UBS's "betrayal" of its clients. One question running through the commentary: did the U.S. violate Switzerland's sovereignty by forcing them to comply, or was Switzerland creating incentives for Americans to break the law?

 Here's what UBS's capitulation could mean for Swiss banking as a whole

  • End of Swiss Parasitism, cheers Alex Salkever at Daily Finance. "By allowing people to hide money they make in one country, Switzerland has intentionally undermined tax collections for most of the Western world and...Swiss banks have been the favored deposit destination of bloodstained African despots, drug lords, and former Nazi officers on the lam."
  • Violation of Swiss Sovereignty declares Georges Ugeux at the Huffington Post. "While I condemn tax fraud as illegal and immoral, I do not believe that the United States has the right to extend its tax arm beyond its borders."
  • Money Will Flow Elsewhere says Margaret Doyle at Reuters "There is no doubt that the case, especially when allied to UBS's near-death experience following the credit boom, has tarnished Switzerland's image of solidity and respectability. There are new centres, like Singapore, offering discreet banking. They will grow at the expense of the Swiss incumbents."
  • Plenty of Other Loopholes suggests Lynnley Browning at the New York Times. "Smaller Swiss banks are still helping clients hide billions of dollars through complex structures in offshore havens in the Caribbean, Panama, Luxembourg, Singapore and Guernsey in the English Channel."
  • Time to Get Another Passport growls Edmundo Braverman at Wall Street Oasis. "What I will say is that if you're American and don't have a second passport from another country, I suggest you make acquiring one a very high priority."
Regulating tax havens are a subject almost everyone--except for this Wall Street Journal contributor--agrees to in principle. But enforcement is another story. Back in April, the G20 proudly vowed to pursue international tax shelters, but fierce lobbying subsequently caused the countries assigned to the "black list" to be removed.