* Committee votes 16 to 9 against debating U.S. deal
* Swiss government fears U.S. indictment of banks
* Government could still help banks reveal information
By Ruben Sprich
BERNE, June 19 (Reuters) - A Swiss parliamentary committeehas again urged the lower house to reject a draft law aimed atprotecting the country's banks from criminal charges in theUnited States for helping wealthy Americans to evade tax.
The Swiss government has warned that the bill's failurecould prompt impatient U.S. prosecutors to indict banks, thoughit could still use an executive order to allow them to hand overdata to try to avert charges.
The economics committee recommended by 16 votes to nine onWednesday that the lower house should refuse to debate thelegislation, even after the upper house confirmed its supportearlier in the day.
The lower house has now begun a procedural debate that willend with a vote on whether to hold the substantive debate. If itrepeats its Tuesday decision not to debate the legislation, thedraft law is effectively dead.
The bill is aimed at allowing banks to sidestep Swisssecrecy laws by disclosing their U.S. dealings so they canstrike deals to avoid prosecution. The deals are neverthelessexpected to include fines that could cost the industry as muchas $10 billion.
Lawmakers from the upper house endorsed a statement sayingthey supported a solution to the long-running tax dispute andcalled on the government to allow banks to cooperate underexisting laws. The lower house is expected to back the call too.
The government's attempt to fast-track the legislationthrough parliament to meet a U.S. ultimatum angered manylawmakers in this fiercely independent country.
While right-wing lawmakers have opposed the bill on thegrounds that it could set a precedent that might prompt othercountries to seek similar concessions from Switzerland, thecentre-left has rejected it on the grounds that Swiss banksshould be forced to face the music for aiding tax evasion.
PROTRACTED NEGOTIATIONS
Switzerland's biggest bank, UBS, was forced in2009 to pay a fine of $780 million and deliver the names of morethan 4,000 clients to avoid indictment, giving the U.S.authorities information that allowed them to pursue other banks.
Since then, the government has been engaged in protractednegotiations to try to reach a settlement for the wholefinancial industry but has been hamstrung by Swiss secrecy lawsand bickering among banks over who should pay the heavy fines.
The protection of client information has helped to makeSwitzerland the world's biggest offshore financial centre, with$2 trillion in assets. But the haven has come under fire asother countries have sought to plug budget deficits by clampingdown on tax evasion, with authorities probing Swiss banks inGermany and France as well as the United States.
U.S. authorities have more than a dozen banks under formalinvestigation, including Credit Suisse, Julius Baer, the Swiss arm of Britain's HSBC, privatelyheld Pictet in Geneva and local government-backed ZuercherKantonalbank and Basler Kantonalbank.
An indictment felled Wegelin & Co this year. The bank paid a$58 million fine and closed its doors for good after pleadingguilty to helping wealthy Americans evade taxes through secretaccounts.