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Iceland sentences bankers to prison for their part in the 2008 collapse
- gizmo 11y agoI consider these prosecutions a good thing, even though the selection of who goes to prison and who gets to enjoy their spoils seems arbitrary. For instance none of the politicians who played benefited from and played a large role in the Icelandic financial crisis have been prosecuted. The financial oversight institutions failed too, but somehow their failure to do their jobs is acceptable? From a game theory perspective persecuting bankers is correct. The incentive for people who are already wealthy to take massive risks gets reduced when they know they may go to prison when it all hits the fan. It has little to do with real justice, though.
- dragandj 11y agoThrough the modern history, politicians always succeeded in turning the plebs against various scapegoats that they blame for the trouble of the day. Ever wonder how they always find someone to mark as a villain, but it is never their, the politicians', mistake?
- ma2rten 11y agoSince the link seems to inaccessible, this website seems to be a mirror of the same content: http://americannewsx.com/crooks-crime/iceland-sentences-26-corrupt-bankers-to-74-years-in-prison/ http://americannewsx.com/crooks-crime/iceland-sentences-26-c...
- gregpilling 11y agoWhat would have happened if the US and Euro banks went down the same path? Does anyone have a well thought out insight?
- grecy 11y agoUS congress would have passed a law making it impossible to jail bankers for their wrongdoing.
- puppetmaster3 11y agoTo your point, USA citizens did not want to pay for the bankers, but here is speech on the congress floor: - http://youtube.com/watch?v=HVOuK_KB9ew http://youtube.com/watch?v=HVOuK_KB9ew
- coldtea 11y agoYeah, things would improve massively for the poor and middle class.
- SloopJon 11y agoI couldn't reach the linked article, but it's about 74 years combined since 2012, as summarized by this Reddit post: https://www.reddit.com/r/news/comments/418h2r/iceland_sentences_26_corrupt_bankers_to_74_years/cz0fbky https://www.reddit.com/r/news/comments/418h2r/iceland_senten... Longest term was six years.
- dantillberg 11y agoYeah; clearer title would be "Iceland Sentences 26 Corrupt Bankers to Total of 74 Years in Prison" instead of the current "Iceland Sentences 26 Corrupt Bankers to 74 Years in Prison".
- kazinator 11y agoThe unambiguous meaning of "N people sentenced to Y years" is that every one of the set of N people was given a Y year sentence. There is nothing unclear about it; it's simply the wrong way to say that each of N people was given Y/N years, on average, so that the total sentences add to Y. You can't add people's years together. Two 30-year-olds are not a 60-year-old, in combination. Moreover, different prisoners do not serve their sentences consecutively; it won't be the case that 74 years passes before the last banker goes free.
- bobwaycott 11y agoIt seems a bit akin to those "Tom, Sally, and Harry bring 50 years experience to solving your problems" type statements that are used when certain businesses/professionals market themselves. Of course, Tom, Sally, and Harry are all in their 30s.
- kazinator 11y agoEven then, it's wacky usage, because a lot of the experience they have overlaps: they learned a lot of the same things in the context of the same body of knowledge and culture.
- Beltiras 11y agoI'm a native of Iceland. There are mixed feelings with respect to the sentences. We are generally proud to have a system that does imprison bankers but there are frustrations that the true architects of the financial crisis not only got off scot free but also with a substantial portion of the loot scurried away on Tortola. There has been substantial revisionist history practiced by the guilty and their defenders and the more time passes since the crash the fuzzier memory becomes. After all the electorate voted the parties that were largely responsible for the system that crashed back into power. I'll answer any questions that you would be curious about local sentiment and coverage. EDIT: Having finally gotten to a copy of the article I want to point out several factual statements in the article that I find a little bit challenging to agree with. 1. Iceland let the banks fail. Not really. It was a restructuring. In the restructure a holding company handed all the assets over to a new corporate entity. All debts and obligations were honored. 2. Iceland avoided austerity Many social programs were cut. Great cutdowns in the healthcare system, so much so it is on the verge of collapse now. 3. Geothermal is clean energy Ask anyone from Reykjavík. Silver can no longer be kept without wrapping it in cloths, otherwise it goes dark in a day due to the hydrogen sulfide pollution. It's also not renewable. You can farm the area for about fifty years before it's too cold to extract and then it takes a millennia to recover. 4. Value of ISK/EUR That may be the artificial value while capital controls are in effect. True value is way below that. I might cover the "snowhenge" problem later, it's a doozy. 5. Quoting the President on the banks. You would have to know how much of a fluffer for the banks the president was for the banks and the oligarchs before the crash to know how stinky that sounds to an Icelander.
- cbeach 11y agoFrustrated that the author neglected to elaborate on the crucial detail - the truth behind Iceland's post-2008 "revival" is that it imposed capital controls on its own citizens. It imprisoned their money to avoid "capital flight." This affected everyone. Even students on school trips had to fill out copious government paperwork before exchanging minimal amounts of -their own- money for foreign currency. I know I'd want to take my earnings and get the hell out, if my government started bowing to leftwing populism and came for the bankers like a medieval pitchfork-waving mob. Capital controls mean that the "recovery" is completely artificial, and until they're fully lifted we won't know just how deep Iceland's problems really go.
- CuriousSkeptic 11y agoOTOH, Once they gave the money to the banks it's not really "their own" any more. That's part of the problem. people's perception is that having money in a bank account is like having cash in a safety deposit box, which is really not the case, at all. A bank account is just a debt, and just like any debt, the bank can default on it. Interestingly enough there was a report, addressing exactly this problem, for the Icelandic government, by means of "souverign money". An arrangemang much more like the saftey deposit box scenario. https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-re...
- WalterBright 11y agoThe only reason to have capital controls is to try to hide the fact that your money is worth less than the government says it is. The history of such is that a correction, always painful, is inevitable. It's happened even in the US (the gold standard).
- MichaelBurge 11y agoI'm not sure I get the hate on bankers. I don't like the bailouts - those could've been handled better - but people seem to be angry about the fact that they offered loans that they shouldn't have. That is, non-bankers were given money that they shouldn't have been given, and the claim is that we should be more selective about offering capital and opportunities to non-bankers and the underprivileged poor. If somebody offered me a billion dollars at a 3% interest rate or whatever it is right now, I would seriously consider accepting it knowing that I don't have the capacity to pay them back. There are a lot of things in the world that pay better than 3% interest and that are relatively safe. Similarly, a bank that gave out loans whenever you asked(up to the 10 loan limit, maybe) would be a great opportunity even for people who couldn't pay it back out of income. You could buy an empty plot of land and put a small apartment complex on it. You could buy a 4-plex and apply any number of forced appreciation techniques(put in a coin-operated laundry, redo the piping to reduce the amount spent on plumbers, plant some flowers outside to increase the attractivity, etc.). Of course, just betting on general appreciation of single-family homes is bad money. Basically, I was too young to really experience the effects of the 2008 and I'm feeling envy rather than anger about these people's ability to cheaply obtain capital. So I don't empathize with these news reports about punishing bankers. Can someone explain why I should feel anger instead?
- jacquesm 11y agoIt's typically not the people that were offered the loans that are angry with the banks, it is the people that ended up paying for the bail-outs without having seen any of the benefits. On another note, plenty of people that were offered those loans are still paying them off today, so it is was a portion of the debt that went bad, not all of it.
- MichaelBurge 11y agoAh, that makes sense. In that case, I agree - don't force me to pay a high tax rate and then use the money to bail out people who make bad deals. That's just rude: I can feel the anger swelling already. The executives would be personally liable for bad decisions that lost their shareholders money, so I could see letting the banks fail and then having people sue the executives to reclaim some portion of their money.(I'm assuming the banks are public companies) Why the cries to have them jailed or criminally punished, though? The article mentions fraud and market manipulation, but that's pretty vague. (I'm assuming people are angry at Icelandic bankers for the same reason they were angry at US bankers)
- JumpCrisscross 11y agoLet's make sure we're comparing apples to apples. Most, if not all, of these convictions were for plain-vanilla securities fraud. Executives using company funds to buy stock for their own accounts on insider information. Or hiding their earnings from tax authorities in Tortola. These actions are clearly illegal and regularly prosecuted in the United States. Comparing these cases to the lack of prosecution of, e.g., Lehman Brothers's Dick Fuld is disingenuous. No laws were clearly broken there.
- chishaku 11y agoComparing the situation in Iceland to the situation in the U.S. is certainly not an apples to apples comparison. The scale and impact of fraud in US financial markets is far greater. It's hard to know what laws were clearly broken when there have been very few prosecutions. Bill Black, former regulator and litigator during the S&L crisis: > The savings and loan debacle was one-seventieth the size of the current crisis, both in terms of losses and the amount of fraud. In that crisis, the savings and loan regulators made over 30,000 criminal referrals, and this produced over 1,000 felony convictions in cases designated as “major” by the Department of Justice. But even that understates the degree of prioritization, because we, the regulators, worked very closely with the FBI and the Justice Department to create a list of the top 100 — the 100 worst fraud schemes. They involved roughly 300 savings and loans and 600 individuals, and virtually all of those people were prosecuted. We had a 90 percent conviction rate, which is the greatest success against elite white-collar crime (in terms of prosecution) in history. > In the current crisis, that same agency, the Office of Thrift Supervision, which was supposed to regulate, among others, Countrywide, Washington Mutual and IndyMac — which collectively made hundreds of thousands of fraudulent mortgage loans — made zero criminal referrals. The Office of the Comptroller of the Currency, which is supposed to regulate the largest national banks, made zero criminal referrals. The Federal Reserve appears to have made zero criminal referrals; it made three about discrimination. And the FDIC was smart enough to refuse to answer the question, but nobody thinks they made any material number of criminal referrals [either]. http://billmoyers.com/2013/09/17/hundreds-of-wall-street-execs-went-to-prison-during-the-last-fraud-fueled-bank-crisis/ http://billmoyers.com/2013/09/17/hundreds-of-wall-street-exe...
- crdoconnor 11y ago
- kazinator 11y agoI.e., each of 26 bankers, for a period of some 2 to 3 years, cannot get a passport.
- bmh_ca 11y agoIf this topic interests you, I recommend you read the book by Gudrun Johnson called "Bringing Down the Banking System: Lessons from Iceland". It is a translation and summary of the Report of the Investigation Commission of Althing (the Icelandic Parliament). https://en.wikipedia.org/wiki/The_Report_of_the_Investigation_Commission_of_Althing https://en.wikipedia.org/wiki/The_Report_of_the_Investigatio... The Report of Althing is, in my opinion, the most comprehensive since the Amulree Report of Newfoundland in 1933, and one of the very few reports to investigate causes of the crisis. As a matter of interest, I seem to recall that 83 million euros was given to Icelandic bankers for their part in the crisis. The proceeds unaccounted for numbered in the billions. Much of what the banks did was modelled on Enron-style deception, a practice which remains quite commonplace now in the financial marketplace.
- e15ctr0n 11y agoAnother great book to read is Michael Lewis' Boomerang: Travels in the New Third World (2012) which is a compilation of articles on the 2008 recession that he wrote for Vanity Fair magazine. The one on Iceland is called "Wall Street on the Tundra - Iceland" and you can see its preview here: http://www.vanityfair.com/culture/2009/04/iceland200904 http://www.vanityfair.com/culture/2009/04/iceland200904 (The complete article is behind Vanity Fair's paywall.)
- junto 11y agoI'm a big believer that for every up there is a down. I respect Iceland for doing this. Rather than giving into a fear of the unknown, they faced their demons. It is without doubt a painful ride, but if any one of us were to negligently run a company into the ground and mismanage it, we would expect to pay the penalty for. I find it sad that we have allowed these big banks to grow so big, that they are "too big to fail". At what point do we have a scenario where other types of company are also too big to fail?
- joeclark77 11y agoBut have they done anything about the RMT'ers in EVE-Online?
- rodionos 11y agoIt maybe utopian or too liberal, but I'm against imprisonment for any kind of crime against wealth, be it shoplifting or securities/bank fraud on planetary scale. I think prison should be used for crimes against humanity, e.g. homicides, domestic violence, child abuse etc. Let the economic agents figure out how to protect their wealth by themselves by increasing transparency, improving risk controls, monitoring and security protection. Say you don't want your car stolen, go and get some insurance, let insurance companies figure out how to prevent theft and find stolen cars. Let them figure out how to make stolen cars unusable. It's just an example, but I think it's doable.
- titzer 11y agoPrivate protection of capital sounds like a terrible idea. Making racketeering and extortion legal (but only if pure money is involved)? No thanks. I want a justice system that punishes someone who steals money behind a desk at least as harshly as someone who steals bread.
- icebraining 11y agoBut under rodionos' suggestion, it would: stealing bread is also a crime against wealth. Wealth is not just "money".
- biot 11y agoI have a bank you can deposit your money into and invest through. I also have an insurance company that will guarantee you won't lose a dime with that bank. Trust me.
- tim333 11y agoImprisonment for bankers doesn't seem to work to well. Too hard to prove. Now if as an alternative if you found with a greater than 50/50 probability that they'd screwed people over you took all their assets that might work. For shoplifters maybe community service.
- kafkaesq 11y agoWould be curious if anyone with knowledge of the various meltdowns that happened in Iceland can tell us if the Wikileaks disclosures from that period contributed significantly to the unravelling, as it happened.
- deleted 11y ago[deleted]