Iceland Wins IceSave cases (against the Uk & The Netherlands)

[Laufey]

Ólafur Ragnar Grímsson the president of Iceland & Gordon Brown former prime minister of the Uk.

(Reuters) - Iceland was right to refuse to repay billions of euros to Britain and the Netherlands for bailing out depositors in a failed Icelandic bank, a European court ruled on Monday.

After the collapse four years ago of Iceland's top lenders during the credit crunch, the British and Dutch governments stepped in to repay savers in the online "Icesave" account run by Landsbanki and wanted Iceland to pay them back directly.

Full Verbatim Quote: Truncated: ©2012 Thomson Reuters. All rights reserved.

Source Link: http://uk.reuters.com/article/2013/0...90R00I20130128

Most of you probably haven't heard about this before but it's a big deal here and in my opinion it's the biggest financial victory a nation has had since the crisis of 2008 started. Hopefully it will encourage others not to pay up quietly and have the courage to fight for what's right.

To put things into perspective: A nation of 300.000 people was asked to compensate the savings of 300.000 foreign savers. About 17.000 dollars per each Icelander. The Uk and The Netherlands demanded this from us because of one Icelandic PRIVATE bank which failed.

It's equivalent to the United States compensating for the loss of 300 million foreign savers, total amount of 5 trillion dollars. All just because one private US bank failed.

So for over 4 years this has been the main financial issue here. It has turned out that the estates of the bank will be able to pay it all (except the outrageous interests they were demanding as well) but when we started negotiating we had no idea if it would cover a third of it or all of it. Even if the state would have just had to pay half of amount it still would have been enough to push the country into bankruptcy.

The government wanted to negotiate and pay and made three attempts to do so. Fortunately the president (who is not part of the government but has to sign laws for them to be activated) refused to sign the laws. That lead to the nation voting on it twice in referendums, rejecting them both times.

All the big players in the financial world, including the IMF, the US and the EU, pressured us to negotiate and pay up. It was a very difficult decision for our president to make but in the end he decided that the democracy was more important than the demands of the world's financial elite.

I'm so proud of my nation right now and finally we can put this never ending saga behind us.

[palbert]

Congratulations! This mess has had the North Atlantic fisheries in limbo for years, of paricular interest to those here in Maine (and in Maritime Canada).

[star-warrior]

When can Iceland and Britain get back to slapping each other with haddock?

[ChickenGuy]

There was an investigative report a while back in the news over here, which noted how in the past Iceland was a model of financial responsiblility and good practice and stability - a place where locals had proper old-fashioned banks that served their people.

But then these three (I thought it was three?) Icelandic banks decided for whatever ridiculous reason that they could play big-time on the world stage and roll with the big boys - BAD mistake.

They started all the usual high-flying nonsense of international shares/derivatives/futures/speculation/bonds/yields/stockmarket dirty tricks - not the right terms I'm using but you know what I'm talking about.

Then it all came crashing down their heads and they pretty much bankrupted the entire country in the process. Just disgraceful. I don't blame the Icelandic people for being furious.

On a seperate question Laufey....

Is it true that as a direct result of all of this economic calamity, Iceland has found itself drifting dangerously towards contemplating joining the EU? I noticed that it's become a possible candidate in the early stages, but with much negotiation ahead.

I personally think it would be the worst mistake Iceland could possibly make. To surrender the country's livelihood of fisheries AND effective control of your budget AND effective control of your laws, to give it all up PERMANENTLY, just for a temporary financial crisis that will be over in a fairly short time.

Really hope your country doesn't go down the road of the bureaucratic, all-consuming, never-ending, unstoppable superstate project that the European Union is.

[bankside]

Of cours ethe other way of looking at it is 300000 British people were told to get lost by 300000 Icelanders who didn't feel like cleaning up the mess they created with lax regulation of the Icelandic banking industry. Those were welcome customers when times were good, essential to Icelandic prosperity. It is a strange way to treat one's customers.

I have one question; were the deposits insured by the government? Canada provides a government guarantee capped at $75000 of any account against insolvency of the bank.

If the depositors left their money in the hands of an Icelandic bank without such a guarantee, they were reckless with their money to leave it with a third-world scam posing as a bank. However, caveat emptor!

But if the Icelandic government did guarantee deposits and then failed to make good, the UK should just be seizing Icelandic assets until the debt is cleared.

[mitchymo]

I think this is Wonderful news.

When i first heard the story, and the money that private individuals and public bodies like town councils and police forces had lost, my initial thoughts were "more fool them". They banked out of the country, they lost the money. They should have banked it with a UK bank for less profit. Not to mention, if they can afford to deposit taxpayers money in foreign banks, the taxpayer is paying TOO much to them.

The right decision has been made. The public shouldn't have to foot the bill if a bank fails.

[Laufey]

Well this ruling confirms what we have said all along that there was no government guarantee.

The EEA regulation states that governments have to set up a safety fund in case any of the banks fail, a fund all of the banks are obligated to put X much of their profits into (I don't remember the exact number). However nowhere does it say that if those funds go bankrupt (which ours did, along with the three biggest banks which combined were more than 90% of our banking system) that the government has to step in.

This type of safety net works when many banks keep such a fund going and one or few fail. Obviously it does not work when the whole banking system collapses like it did over here.

The Uk and the Netherlands on their own decided to pay the savers and afterwards told us that they were gonna send us the bill. Despite regulations saying there is no state guarantee they figured they could just go ahead with it and then bully our tiny nation into paying up. Thankfully they failed to do so.

It is recognized by the court that the emergency law we put in place, to guarantee local accounts but not foreign ones, in the end was best for everyone. We had to take drastic actions to keep our financial system running and if we had failed to do so the foreign savers would have ended up with less than they are now getting. So although technically it was discriminating at the time it is now recognized by the court that the actions of those times in the end turned out to be best for everyone including the foreign savers.

The failed bank has now already paid 90% of the minimum and is expected to pay it all and a little more in the near future. The main problem the British and Dutch governments have with this is that they won't be getting the 5% interest rate from the "loan" they gave us without asking.

The lesson learned here should be that high interest rate saving accounts are also high risk. You can't just put all your money in a high interest rate / high risk saving account and then when it fails demand state guarantee.

The misunderstanding here is that we said we wouldn't pay the savers at all. It has always been clear that the estates of the fallen bank would be used for this. The only thing we said no to was to agree to a state guarantee when there was none. Also remember that the savers immediately got their minimum paid in 2008 so the issue here is not about paying the minimum to the savers but to pay the governments of those two countries for doing so back then.

ChickenGuy yes our three biggest banks failed but it was just one bank (Landsbanki) which was behind the IceSave savings.

Iceland won't join the EU in the near future and hopefully never. Yes we have a pro-EU government negotiating right now but polls show that 2/3 of the nation is against joining it. It used to be like 50/50 back in 2008 but now there is very little interest in it after the harsh treatment of the past few years. We have parliamentary elections this summer and I'm expecting a new government which will withdraw the EU application.