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Iceland put top finance executives behind bars, but fears of cronyism remain
- KKKKkkkk1 11y agoWhy should Iceland bankers have gone to prison? For taking money from British depositors and investing it in the Spanish housing bubble? Let the British send their bankers to prison.
- arethuza 11y agoWell, Fred the Shred had his "Sir" removed - which is pretty harsh by UK standards.
- pascalmemories 11y agoBut he still has 24x7 police protection at levels similar to the Royal Family. His house was removed from Google Maps - which seems silly as you just look for the obscured house on the street (why do people do that???). UK bankers were arguably key to the creation and implosion of the worldwide banking system but are already back to obscene bonus levels and see the taxpayer bailouts as a just reward to ensure their opulent and obscene lifestyles. I'd happily have my 'Sir' title removed and be left with the money and have police officers guarding me 24x7 to ensure I can enjoy my ill-gotten gains. And if the media tries to publish anything about me, then I can go get a super-injunction to make it illegal to even say I got an injunction ! (http://www.theguardian.com/business/2011/mar/10/fred-goodwin-superinjunction-banking http://www.theguardian.com/business/2011/mar/10/fred-goodwin...)
- arethuza 11y agoWell, I was being slightly sarcastic. NB I remember crossing George Street here in Edinburgh in early 2009, a familiar looking chap waited in his convertible Ferrari for me to cross. A few minutes afterwards I realised why he looked familiar.... quite brave being out in Edinburgh at that time in a convertible - for a lot of reasons not just the weather.
- tremon 11y agoWell, I was being slightly sarcastic There should be a special tag for recursive sarcasm.
- iheartmemcache 11y agoFT covered the nature of the actual crimes in another article[1]. TD;DR -- Fraud to underwrite loans. Interestingly, cult comic Doug Stanhope[0] has a pretty large European following and was invited by the former mayor of Reykjavik (also a comic) to essentially hang out. On a podcast, he recounts the tales of him and his long-term life-partner Bingo going to their jails[2]. It's quite a fascinating take as to how humane the jails are, and the liberties given to the convicts. (Sharp bread knives were held by the incarcerated to prepare dinner only tethered by a wire similar to the wires banks use to keep their pens from theft; Bingo said it felt "more like a college dorm than a prison".) [0] Probably the most poignant alcoholic of our generation, offering insightful, often scathing, critiques on the failings of modern society, while vaguely masking his idealism in the levity of fist fuck jokes. After some sets, one is sat scratching your head - simultaneously sore from the physical pain of excessive laughter and mental pain as you're left ruminating on concepts Kierkegaard himself would categorize as 'angst' [1] http://www.ft.com/cms/s/0/6a79df88-1a62-11e5-a130-2e7db721f996.html http://www.ft.com/cms/s/0/6a79df88-1a62-11e5-a130-2e7db721f9... [2] https://www.youtube.com/watch?v=_0s8M6ZTmL8 https://www.youtube.com/watch?v=_0s8M6ZTmL8
- bmh_ca 11y agoThere was outright fraud by some Iceland bankers, who indicated they had assets and relationships that did not exist. Issues include: - Indicating to the ECB and others that they had relationships with strong German banks (when the Iceland bankers showed up at the German banks, the Germans indicated they had never heard of the Iceland banks) - Engaging in "next-gen Enron-style" corporate asset-liability accounting deceit, such as counting zero-coupon bonds cross-issued with other banks as assets but not as liabilities - Knowingly accepting billions in bailout funds from the ECB on said fraud - Failing to acknowledge, take steps to prevent or mitigate damage, at the point when it was undeniable that Icelandic banks could never cover their liabilities - Paying their executives on quarterly bonuses in spite of horrific losses That's just a glossy sampling. If it's an interesting topic for you, I strongly recommend the book by my friend Gudrun Johnson, "Bringing Down the Banking System: Lessons from Iceland". The Report of the Althingy (Icelandic parliament) is one of the most exceptional pieces of literature of our generation (https://en.wikipedia.org/wiki/The_Report_of_the_Investigation_Commission_of_Althing https://en.wikipedia.org/wiki/The_Report_of_the_Investigatio...). It is the source on which Gudrun based her book, and arguably the best post-mortem on an insolvency ever made, or at least since the Amulree Royal Commission on the insolvency of the Dominion of Newfoundland. EDIT Fixed list.
- arethuza 11y ago"...you have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets." Michael Lewis in Boomerang.
- melling 11y agoThere's a lot to read. Can someone explain the details of actual crimes for which they were convicted? The whole "finance crimes" always seem a little fuzzy. If you run up $70 billion in debt, for example, and need a bailout, is that a crime? http://www.bloomberg.com/news/articles/2016-03-29/puerto-rico-creditors-said-to-unite-for-debt-counterproposal http://www.bloomberg.com/news/articles/2016-03-29/puerto-ric... It almost seems like a game.
- TheBiv 11y agoMarket manipulation http://www.reuters.com/article/us-iceland-bankers-idUSKBN0LG2O420150213 http://www.reuters.com/article/us-iceland-bankers-idUSKBN0LG...
- JumpCrisscross 11y agoNo, they went to jail for fraud. For example, these bankers [1] approved a loan to a shell company owned by the bank's insiders for the purpose of buying the banks shares. None of the large banks in the U.S. did anything like that. The closest we've had was the LIBOR scandal, where prosecution is certainly happening. [1] http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0EW20121228 http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0E...
- melling 11y agoHow did they manipulate the market?
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- jokull 11y agoMy uncle is one of the jailed, mentioned in the article. One of Iceland’s most respected lawyers and teacher at the University of Iceland has gone on paper, and on radio, and on TV, saying that the Al Thani trials did not make any sense, for more than one reason. The most obvious mistake was that by the time the case went from local courtrooms to the federal level the prosecution had completely switched the focus of the case, going so far as to turn prosecuted into witnesses. (The courts also gave out 99% green light on all wire taps requested from the prosecutors to prepare the case, and let them put my uncle and others in multi-day isolation years after the events themselves... didn’t really get the reason for that) The court ruling is very interesting. The foundation of the conviction is market manipulation, which, at least in Iceland, is highly interpretive by judges. It seems obvious when you read the ruling and the criticism that judges were ruling in favour of public opinion. That’s my opinion and reading of it, the public opinion is still very much against bankers, so ymmv when asking other people in Iceland. The article also fails to mention how Kaupthing went bankrupt. Understandably as the article doesn’t go into any detail on anything at all really. But it involves credit lines shutting down completely following a raid by the British on UK offices of Kaupthing using terrorist law to seize files and shut down the bank’s UK presence. You could maybe google translate this for better info: http://www.pressan.is/pressupennar/Lesa_Brynjar/al-thanimalid-uttekt http://www.pressan.is/pressupennar/Lesa_Brynjar/al-thanimali...
- ivoras 11y agoHere's a more direct post about various Iceland-related myths: https://studiotendra.com/2012/12/29/what-is-actually-going-on-in-iceland/ https://studiotendra.com/2012/12/29/what-is-actually-going-o...
- Tloewald 11y agoThanks for the link. Very informative.
- ktRolster 11y agoHere's a quote from that article: Icelandic MP’s received a lot of no-strings-attached free money from the banks and the key players in the banking bubble and ensuing collapse are not the same as the people who are being convicted for fraud or insider trading.
- grabcocque 11y agoJust to clarify, They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland. They weren't sent to prison for being "bad bankers" which isn't a crime in Iceland or anywhere else.
- bradleyjg 11y agoYes. Just look at all those bankers that went to prison for 30+ years of manipulating LIBOR. Well one banker anyway. And all those bankers that went to prison for reps and warranty fraud on synthetic CDOs. Well no bankers anyway. This is clearly a dog bites man story about something that happens all over.
- forgetsusername 11y ago>Well no bankers anyway. Please point to the convictions. We don't throw people in jail because we don't like their business practices. The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. Of course, often these are the same people who interpret things like TARP as a "gift" to the banks.
- crdoconnor 11y ago>We don't throw people in jail because we don't like their business practices. We do when they're fraudulent* * Exceptions for too big to jail bankers. Jamie Dimon won't see a day in jail despite running a criminal enterprise. >The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. The banking industry has a meltdown when the government isn't treating them with utter admiration. If the DoJ were actually concerned about putting bankers behind bars they could easily use Sarbanes-Oxley to make a few bank CEOs do the perp walk in an orange jumpsuit. They're far too rich a source of campaign contributions, however (see Hillary's Goldman Sachs speaking fees for instance).
- 6stringmerc 11y agoWelcome to the United States, where bad bankers create catastrophic bubbles while leading the Federal Reserve then deny their responsibility later.
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- vmateixeira 11y agoThey're allowed to browse the Internet and go to the Gym? Sounds better than most hotels I've been.
- kybernetikos 11y agoAre you saying that life in a prison should be worse than living in a budget hotel? Why?
- vmateixeira 11y agoWhat I'm saying is that with so much public service to be done, why put them on a 'pleasant' place? They certainly have there roads with snow to be unblocked, pastures and streets to be clean, poor people to be fed...
- kybernetikos 11y agoWhy should there be any link between forced labour and prison?
- ageofwant 11y agoYes. Because prisons are not "correctional facilities" they are instruments of punishment, yielded by the state in the same way other compliance enforcing institutions are. All authority in human societies are fundamentally based on violence, or the threat of it. Now if prisons were in fact "correctional facilities" with the resources skills and programs required to train inmates how to function in a modern civil society the answer would be "maybe".
- kybernetikos 11y agoPrisons are exactly what the society that has them wants them to be, no more no less. If Iceland wants them to be correctional facilities, and provides the resources skills and programs required to train inmates to function in a modern civil society, then that's what they are. If your society does not emphasise that function for prisons, this is a choice that your society has made, not some reflection of a universal truth. Even if, as in most societies there is some ambivalence about the functions of prisons, surely Iceland has the right to set its own priorities.
- deepnet 11y agoExactly, the problem has got worse. Banks are larger and more centralised, the offenders unpunished know they can act with impunity, legislation is unchanged. Banking/ finance types now know that if they are losing money they must simply lose big enough to trigger more bailouts and the taxpayer pays. This is despotic anti-capitalism: they keep the winnings and losses are generational debt on which they again profit. The only ways that have ever worked to inject capital is to pay the poor and middle class by national infrastructure projects or GWBush style $1000 cheques - everyone benefits as money circulates. Keynsian economics got this right. Banks and the rich largely hoard capital where it is useless, pretending risk aversion when it was outright fraud that caused the econopocalypse, not risky but legitimate loans to business. This will happen again unless investment and savings banks are again separated, but no nation wants to do it unilaterally fearing an exodus of non-dom capital they use to cook the government figures. Finance is rotten to its core. Quantative easing is bailouts by the backdoor. Austerity stagnates an economy.
- forgetsusername 11y ago>the offenders unpunished Unpunished...for what? What are the crimes? I mean, people were certainly punished financially when their banks equity was wiped out or bought for pennies on the dollar. >Quantative easing is bailouts by the backdoor. Please elaborate. >Keynsian economics got this right. Do you know the academic origins of QE?
- crdoconnor 11y ago>Unpunished...for what? What are the crimes? Wire fraud. Illegal since 1872. >Please elaborate. QE pushed up the value of assets which had plunged in value. Assets which were used by the banks as collateral for loans which were now bigger than the value of those assets and were going bad very quickly. That made those banks what is technically known as "insolvent"... until the stealth bailout. >Do you know the academic origins of QE? Monetarism. You can place the blame squarely at Milton Friedman's feet for QE, not Keynes. Keynes advocated fiscal expansion, not funny money tricks to reduce interest rates below zero. Milton Friedman was firmly of the opinion that tweaking interest rates was enough to successfully manage any economy. Clearly not so much...
- Kristine1975 11y agoNow please continue with the rest. Deutsche Bank anyone?
- headmelted 11y ago"They spend their days doing laundry, working out in the gym and browsing the Internet." Hard time. Or as my wife calls it, time. Badum tisch.
- jakub_h 11y agoWell at least the biggest thing they can break now is the gym equipment.
- haberman 11y agoThe whole article feels like a non-sequitur. "Iceland put bankers in prison for helping cause the financial crisis, yet there is still crony capitalism." How are these two facts related? Putting bankers in prison for helping the economy crash is not intended to solve the problem of bankers being too cozy with politicians. It's intended to solve the problem of bankers reaping private returns from taking public/socialized risk. It's trying to ensure that when bankers hurt everybody, they feel the hurt too.
- hownottowrite 11y agoKviabryggja facilities: http://www.visir.is/fancy-facilities--icelandic-banker-heads-to-prison/article/2015150229353 http://www.visir.is/fancy-facilities--icelandic-banker-heads...
- toomuchtodo 11y agoWould you prefer we flog them in public? Prison accommodations need not be barbaric to punish.
- hownottowrite 11y agoIndeed. http://icelandreview.com/news/2015/11/10/riding-lessons-imprisoned-bankers-canceled http://icelandreview.com/news/2015/11/10/riding-lessons-impr...
- toomuchtodo 11y agoI agree thats a bit over the top.
- qaq 11y agoI think if enough people cared you could greatly affect how US Banks act. In reality they are pretty much owned by you (through Vanguard, Fidelity, Blackrock, Capital Companies Group etc.) you have 0 input on how they vote though with your shares.
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- ageofwant 11y agoMoney is a social contract. Its core intention is to formalise the exchange of promises fundamentally based on trust. I trust you to honour your promise to me, thats why I accept this pile of colourful paper tokens for my precious cow. Society, as we are used to, is dependant on this contract being honoured. This system is currently so heavily laden with trust-sapping parasites that the host is verging on collapse.
- vette982 11y agoBringing white-collar criminal cases may be easier in Iceland because courts don’t use juries. Rather, they employ neutral experts to help judges understand the intricacies of finance. I believe Iceland is in the minority among developed nations that don't use juries, but I think this is a major strength in their court system.
- ptaipale 11y agoI think that at least in most crimes and with a definition of "jury" similar to that of USA or UK, most developed nations don't have jury trials. The common law countries do (USA and UK plus some Commonwealth countries, such as Canada, Australia, Hong Kong). Some countries have some elements of traditional juries in some kinds of court cases, but for example in Nordic countries, there are no jurors, just lay judges. The lay judges don't sit in a jury box, they sit on the bench for judges, and they sit many cases, not just one where they'd be called to jury duty. For example, Iceland, Norway, Sweden, Denmark, Finland, Poland, Germany, Czech Republic, Slovakia, Hungary, Netherlands, Italy, Spain don't really have jury trials. Belgium, France, Switzerland and Russia have some kind of juries in some limited cases, but not commonly. Also many developed former Commonwealth countries have given up jury trials (South Africa, Singapore) while some countries that did not have jury trials have fairly recently started to experiment with them (South Korea, Japan). However, it would be safe to say that most developed nations don't have jury trials, or only have them for very specific circumstances.
- lintiness 11y agoso much party / political garbage in this thread. the reality is this: if the government could prove bankers in the us broke laws, they'd throw them in jail. they can't.
- willow9886 11y agoTo anyone interested in this article, I would recommend reading the book Bommerang: Travels in the New Third World by Michael Lewis: http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0393343448 http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0...
- onion2k 11y agoWe should note that Iceland is a country with a population of 323,000 people - that's a large town in most other countries. The scale of the Icelandic banks compared to other countries was really not equivalent.
- ptaipale 11y agoThe scale of the Icelandic banks compared to the country's population/national economy was humongous. That is probably why the banking business was so difficult to control (once it was fed, as rumored, with some grey money from Russia).
- halviti 11y agoYou're making a comment that's often repeated when talking about whether or not a bank bailout is a good idea.. but that is not the issue being discussed here. This conversation is about whether or not it's in everyone's best interest to try harder for criminal prosecution in these cases.. which should not be something determined by things like population size.