Iceland put top finance executives behind bars, but fears of cronyism remain

My 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-thanimali...

>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?

>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).

Yeah, but putting it that way it doesn't make Iceland seem like the Socialist utopia that it is. Evil bankers are the cause of all of the world's problems; they're why things aren't free and stuff. #FeelTheBern

There 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_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.