Iceland jails its 26th banker
Jan 18, 2016
The contrast between the US and Iceland is huge. As a result of the 2007-2008 economic crisis, the US fined banks but did not jail any of the bankers themselves. The fines were far smaller than the amount of money the banks made on their fraud and theft.
Iceland, however, took a very different path, jailing bankers and refusing to make the taxpayers responsible to bail out the banks.
“When the banking induced “Great Recession of ’08” struck, Iceland’s economic hit was among the hardest. However, instead of rewarding fraudulent banking procedures with tons of bailout money, they took a different path….
“When Iceland’s three major banks collapsed, it resulted in defaults totaling $114 billion in a country with a gross domestic product (GDP) of only $19 billion. In October, 2008 the parliament passed emergency legislation to take over the domestic operations of the major banks and established new banks to handle them. They did not, however, take over any of the foreign assets or obligations. Those stayed with the original banks, right into bankruptcy.
“They then brought charges against several banking executives for fraud and market manipulation, resulting in sentences ranging from four to five and a half years….
“In the U.S., we simply tapped a few wrists with small fines, that ended up being paid by their respective banks….
“As to how it has all turned out, here’s what the International Monetary Fund Survey has to say about it:
“Iceland has rebounded after the 2008/9 crisis and will soon surpass pre-crisis output levels with strong performance in tourism and fisheries. Debt ratios are on a downward path and balance sheets have broadly been restored. The financial sector is back on track though with some important items remaining on the docket.”
“As the above survey also states, Iceland is “the first 2008-10 crisis country in Europe to surpass its pre-crisis peak of economic output.”
It appears that Iceland took the best course of action. While the US economy remains stagnant except for artificial life support that has inflated the stock markets and enriched the few, Iceland’s actual economy has rebounded to its pre-crisis levels.
Dr. Stephen Jones