Home > Uncategorized > In Iceland bankers are not Holy Cows and that is good for the country

In Iceland bankers are not Holy Cows and that is good for the country

from Asad Zaman

In a story not reported on at all by any Western mainstream media source, Iceland just sentenced another five high level bankers to prison for directly contributing to the collapse of the country’s economy in 2008.

This brings the total to 26 bankers now behind bars in Iceland, with most being CEOs of large financial institutions, rather than low level traders.

Most of those jailed will serve terms of two to five years, according to a report by Iceland Magazine, which notes that three executives at Landsbankinn and two at Kaupþing, along with one prominent investor, have been prosecuted.

Their crimes include market manipulation, embezzlement, and breach of fiduciary duties. Their market manipulation destroyed the country’s economy and to this day Iceland is still having to repay the global loan sharks at the IMF, as well as governments of other countries, which kept the nation operating.

The article explains that the prosecutions have been possible because rather than protect and reward the very institutions responsible for the collapse, and the gangsters that run them, the Icelandic government let them fail, and then created a financial supervisory authority to strictly oversee the banks.

Iceland’s President, Olafur Ragnar Grimmson noted:

“Why are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way? The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity. ?People in enlightened democracies are not going to accept that in the long run.”

The President added:

“We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing in Europe.”

While the country’s economy is far from what it once was, it has stabilized and is in a position to recover.

Meanwhile, the governments of the US and Europe bailed out most of those responsible for playing a direct role in the financial crisis that crippled the global economy.

In the US, Congress gave American banks a $700 billion TARP bailout at the expense of taxpayers.

Not one banker in the US has even been charged with a crime relating to the financial collapse, there is still virtually no regulation of the banks, and they are pulling in a near record $160 billion in annual profits, all from “money” created out of thin air.

The banksters continue to be protected, at all levels, and the effects of their criminal actions continue to worsen every day. Another financial catastrophe is a certainty.

Other reports:

http://uk.reuters.com/article/2015/02/13/uk-iceland-bankers-idUKKBN0LH0OC20150213

http://www.independent.co.uk/news/business/news/three-charts-that-show-icelands-economy-recovered-after-it-imprisoned-bankers-and-let-banks-go-bust-10309503.html

  1. October 26, 2015 at 6:47 pm

    In their study, “Structural Power and Bank Bailouts in the United Kingdom and the United States” Culpepper and Reinke succinctly state their reasoning on why selective bank bailouts by government are a normal and necessary part of business in capitalist nations.

    “Large banks are central to the functioning of financial systems, and when their failure risks bringing down the entire financial edifice, the structural position of these banks makes a bailout the most likely outcome. That is a feature of capitalism generally, not just American capitalism.”

    But, and this is enlightening Culpepper and Reinke draw no distinctions among the possible reasons for bank failures. In other words, they say nothing about banks failing due to the illegal/criminal activities of bank managers vs. banks failing for other reasons. And they say nothing therefore of what if anything should be done about failures caused by illegal/criminal activities. So this leads to the quite clear distinction between bank bailouts and punishing those who caused such failures by their illegal/criminal activities. The US and UK could bailout large, structurally significant banks to protect the nation’s economy. But it does not follow that the government should refrain from investigating and where discovered prosecuting illegal/criminal activities by bank officers/personnel. In fact, it would be incumbent on government to pursue such prosecutions, for the same reasons government bailed out the banks — to protect the nation’s economy. So why then did Iceland pursue this “normal” course of action, while the US, UK, Germany, etc. did not pursue it? The primary possible reasons it seems are two. First, the banks control enough political leaders to stop such prosecution. Second, political leaders really believe that any actions that are profitable for a bank are acceptable, and thus legal, even if they later bring down the whole structure. I’m not certain which possibility is more disturbing.

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