No, it matters a *great* deal what Darling was told in that conversation because it is as far as we know the reason used to justify freezing the Landsbanki funds (under Part 2, Article 4 of the Anti-terrorism, Crime and Security Act 2001) and then as the justification to also force Kaupthing Singer & Friedlander into administration* thus forcing Kaupthing, a solvent bank, into technical default, and then so almost guaranteed bankruptcy. (David Oddsson’s interview has not actually been cited by Darling or Brown as the basis, but no doubt they will stretch to that soon enough as the pressure mounts on them.)

If Darling did not have a sound basis for his categorical assertion (first made on BBC radio and then picked up by media worldwide), which he clearly *didn’t*, then he acted in extreme bad faith, as did Brown who must also have been fully briefed on the reality. These are meant to be responsible leaders of state, not ‘the man on the street’. Their positions of office mean their actions are held to a higher standard.

*under Section 6 of the Banking (Special Provisions) Act 2008 AKA The Northern Rock Act.

Also has it not perhaps occurred to you that as an operating and solvent bank, Kaupthing and its fully UK-based and regulated subsidiary Kaupthing Singer & Friedlander might have been able to help the situation that savers and other creditors of Landsbanki now find themselves in if it were still operating?

By perhaps buying Landsbanki (as was the intent of Kaupthing management as reported on Oct 5th) and thus ensuring that UK and Dutch savers, etc. would get their money more quickly, other than as now having to wait up to 3 months and making applications for compensation being paid, etc. (although who knows what will happen with the Landsbanki assets currently in the hands of the U.K. Treasury – perhaps they will be ‘utilized’ for this purpose as that is good politics for Brown and Darling and to hell with the UK charities and local authorities, etc, etc.).

Landsbanki had assets and still does, but now they are to be liquidated at fire sale prices, and no doubt these are now worth far less than if it had been acquired by Kaupthing.

Landsbanki acquired by Kaupthing would also have meant that the UK charities and local authorities plus other non-UK creditors would not be losing out (as appears to be the case).

>Banks, having liabilities exceeding 100 bn EUR. This is insane for an country of 300.000 people,
>my god! The foreign depositors could NEVER be repaid, since the numbers per icelander were
>simply staggering (EUR 20.000 per icelander or more).

The banks had good assets and I don’t think anyone knowledgeable has disputed that they were well run. However, as is the case with the majority of banks (except for example some Islamic banks), for all, the amount of leverage in their debt to equity ratios is simply a matter of degree.

Modern banking is based on fractional reserve operation, and therefore it is the willingness to be lent money, as well as perception of stability that matter most.

By way of example Switzerland’s banks are far more highly leveraged than Iceland’s, and so are the UK’s. Switzerland’s banks are in worse shape than many (UBS for example has huge exposure to toxic subprime securities), and they have their own currency just as Iceland. The Swiss Franc while well managed is a very small currency. What the Swiss do not have is a so called ally government telling lies and accusing them of being bankrupt as has happened with Darling and Brown.

As the credit crunch has hit harder and harder what mattered in the final analysis was to have a powerful lender of last resort. The Icelandic banks and government did seek assistance* but were rebuffed. And then of course at a critical time came the actions of Darling and Brown. Do not underestimate the damage that their briefing of the world did, let alone their asset freeze of Landsbanki and forced shutdown of Kaupthing Singer and Friedlander.

*the banks were entitled to liquidity assistance from the governments of the countries of their subsidiaries i.e. Luxembourg (European Central Bank, Euros), or London (Bank of England, Pounds) via such mechanisms as the discount window and open market operations of the respective central banks.

>So I know you did not defraud the
>depositors intentionally, but this does not help people who lost their life savings, proceeds from
>the house sales, and similar.

If you are referring to the citizens of the UK and the Netherlands with deposits in Landsbanki, then what you actually mean is that people who are going to have to wait probably at most a few months to get their money back. They have *not* lost anything in fact, other than potentially interest on the money.

The deposits of ‘ordinary’ British depositors are guaranteed by the Icelandic government up to EUR 20,887 (£16,300) as was always made clear on the Landsbanki account documents, website, and elsewhere, and the UK government for funds above that (although not true yet of Kaupthing Singer & Friedlander Isle of Man Ltd and Landsbanki Guernsey).

The people who have “lost their life savings, proceeds from the house sales, and similar”, as you put it, are ordinary *Icelanders*.

Ordinary Icelandic people are indeed covered by the deposit insurance and additional guarantees for money they had in accounts at the banks (as the UK has given for their own citizens). But *not* those Icelanders who have their lifetime savings invested in bonds and shares of the banks. Those are *not* covered by deposit insurance. A huge number had bought longer term bonds or shares in the banks that are not covered, some dating back from the late 1980s and early 1990s.

It appears Icelanders will lose all of that.

You don’t hear them complaining about it too much, but many people in Iceland are losing their life savings because of this, the unfair collapse of the banks.

>Please, do not insult other people with the excuses that you did not anything with it.
>You profited from it.

Really, other than for a few years of a strong Icelandic Krona making some goods relatively affordable for the first time (not true today with a 40% or more depreciation), how exactly did your average, hard working Icelander profit?

Those who invested in bank shares or longer term bank bonds have now been wiped out.

Those who took out loans in foreign currency (most people) are now seeing loan payments doubled or tripled.

So, again, how exactly has your average, hard working Icelander profited?

>It was unsustainable, and you cannot pay back the depositors, which financed the
>lifestyle of each and every icelander with (now gone) deposits.

The UK deposits are not *gone*, they are either frozen in accounts in London, or in the form of monies loaned out to people that are to be paid. Of course all of these assets are not all liquid right now, but that’s the way banks work.

In sum, you are way, way out of line making statements like you have unless you know something very specific about the Icelandic situation of the last few years that the Icelanders now facing huge price hikes on even the most basic goods, crippling loan payments, and the loss of shares in banks and bonds, themselves don’t.

Short term, Icelanders are having it harder than UK and Dutch depositors (the Netherlands has anyway come to terms far more quickly and reasonably regarding IceSave) even though those depositors are currently *temporarily* without their money.

Mid-term for many ordinary Icelanders life will be far far tougher because of what has happened to the banks than for UK depositors who can just walk away with their money once it is refunded to them. Many Icelanders as I said have lost it all and while they have their much commented on goods, TVs, cars and so forth, have crippling loans making those items worth less than the loans they have.

Of course Icelanders will bounce back but short and mid-term things are going to be very tough.

No, he was not “wrong”. Darling *lied*. As is the case, as the truth comes out, many who believed Darling and Brown are suffering from cognitive dissonance*. I think you are one of those Trevor, and if so who can blame you. They are after all, in the top spots at the head of the UK government, and as such we should all expect a high standard of probity from them.

*On cognitive dissonance: “when someone is called upon to learn something which contradicts what they already think they know — particularly if they are committed to that prior knowledge — they are likely to resist the new learning.”

Darling’s sound bite on the BBC radio that he then continued to repeat in other interviews including on BBC GMTV, then shot around the world far and round by a media eager for news was *not* a fair good faith summary of the position of the Icelandic government, either in general, or based on the conversation between Darling and Mathiesen.

I also wonder if Darling actually read the letter sent by the Icelandic Government on the 6th October.

Mathiesen: “…we have set out a new legislation where we are prioritizing the deposits.”

[This refers to change to the Icelandic “Act on Deposit Guarantees and Investor-Compensation Scheme, No. 98/1999? which bumped bank depositors right to *the top* of the list of creditors in the event of bankruptcy of the banks, as signed into law on the day of the conversation (7th) but that was no doubt explained in the letter of 6th October.]

Mathiesen: ”…Yes, we guarantee the deposits in the banks and branches here in Iceland.

Darling: But not the branches outside Iceland?

Mathiesen:  No, not outside of what was already in the letter that we sent.”

[i.e. only to the the minimum deposit guarantee for savers of EUR 20,887 (£16,300) for each account holder, foreign or not, based on EU directive 94/19/EC.]
….
Mathiesen: ”but the point is also, Chancellor, that we have for months been trying to talk to everybody around us and trying to tell them that we were in trouble and ask them for support and we have actually gotten very little support.”
…
Darling: “Well, you know, I do understand your position. You have to understand that the reputation of your country is going to be terrible.”

Mathiesen: ”Yes, we do understand that. We will try our utmost to avoid that. We need to secure the domestic situation, before I can give you any guarantees for anything else.”
…
Darling: “…We would have to explain to people here what has happened. It will, of course, no doubt, have repercussions for others. It really is a very, very difficult situation where people thought they were covered and then they discover the insurance fund has got no money in it.”

Mathiesen: ”Yes, as we said in the letter …”

[then interrupted again by Darling, a common trait in the impatient way Darling communicates.]

What is clear here is that the Icelandic government guarantees to back the Depositors’ and Investors’ Guarantee Fund up with taxpayer’s money even if that fund has insufficient monies in it, but only up to their obligations of EUR 20,887 (£16,300) for each account holder.

And clearly what Darling *wants* to hear is that they will guarantee *all* deposits for everyone in the UK too. But of course, no responsible member of government is going to promise that given that Iceland has just shy of 180,000 taxpayers in total**. But certainly it was clear that the Icelandic government was going to live up to its promises of EUR 20,887 (£16,300).

**As David Oddsson stated in his Kastljos interview in the evening of 7th October:
“…When the debts have reached a stage where the banks need EUR 50 billion to EUR 55 billion in the next three to four years and they can’t get the money because interbank wholesale lending markets are not functioning then if we committed to this we would be placing our children and grandchildren into so much debt that it would be slavery.”

I urge everyone who has not done so to read the complete transcript of the conversation at http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=314205 , and also to seek out the transcript of the David Oddsson Kastljos interview in my comments here:
http://www.icenews.is/index.php/2008/10/16/unbowed-icelandic-pm-sends-a-strong-message-to-uk/
try and keep your mind open and seek the facts yourself before parroting off the big lies put out by the Brown-Darling axis of disinformation.

The transcript shows that Darling lied. And showed extreme bad faith.

While you are about it, look up the Scottish Glenrothes by-election of 2008, the “arc of prosperity”, (and newly coined “arc of insolvency”), as well as what exactly Gordon Brown has to lose if his party gets trounced in that by-election by the Scottish Nationalist Party. I think then you will understand why Gordon Brown did what he did based on Darling’s lie.

sorry guys. I cannot help to be sympathetic with your plight, because there are really hard times ahead for you. But, the more I read the facts (including the interview with David Oddson and the transcript of the infamous conversation), the more I am convinced that you cannot blame anyone else than you.

It does not matter what exactly Darling (mis)understood during that conversation. The iceland’s finance minister was clear in that conversation (read the whole thing, not just the excerpts!): iceland was totally unable to guarantee deposits of iceland’s bank (not only the deposits of one bank, landsbanki, which was then in the focus). How this happened? Well, first, you had unbearable, almost idiotic concentratration of financial sector. Banks, having liabilities exceeding 100 bn EUR. This is insane for an country of 300.000 people, my god! The foreign depositors could NEVER be repaid, since the numbers per icelander were simply staggering (EUR 20.000 per icelander or more). So I know you did not defraud the depositors intentionally, but this does not help people who lost their life savings, proceeds from the house sales, and similar. And yes, YOU DID PROFIT from that insane banking scheme. You did profit with all the jobs the financial sector and its offshots, you did profit from the acqusition spree, performed by your tycoons worldwide. You did profit, since the industry (fishing and aluminium) on your island simply cannot provide the luxury of being one of the most rich nations on earth, it cannot provide the means for the most extravagant cars, most expensive dining and drinks and the designer gear in reykjavik shop for nouveau riches. Please, do not insult other people with the excuses that you did not anything with it. You profited from it. It was unsustainable, and you cannot pay back the depositors, which financed the lifestyle of each and every icelander with (now gone) deposits. If you will be ever able to pay back the money, it will be with significant fall in quality of live, basically, to the levels where iceland was before this banking craze started, and most probably even below that in the near term.

He was wrong, but only slightly. “No intention” was wrong, as there was intention but only after Icelandic depositors were taken care of, and, btw, “we have no money and we’ve been trying to tell you for six months”.

You can’t meet obligations with intentions, no matter how genuine.

I have tried to sympathise with Icelanders in their plight, but it is becomming impossible. A paltry 500 turned up to demonstrate to demand the resignation of Oddsson last Saturday, meanwhile 40,000 sign a petition saying “we are not terrorists” (complete with photos of 2 year old kids with “Icelandic Terrorist” photoshopped onto them). What an utter waste of bandwidth. Not a soul on earth has called them terrorists. It is an excercise in self delusion par exellence. Said petition also has an excerpt from the transcript as if to prove their point, without realising it shoots their fox dead.

With huge help from Brown and Darling.

>…One benefit for the UK I suppose is that the
>Scots can no longer claim that they
>can go it alone by citing Iceland as a leading light
>of independence and economic strength.

Ding. Well, that’s what Brown’s actions in pushing Iceland over the cliff, were for weren’t they. He’s not even trying to hide it.

The Scots have just had their two biggest banks nationalized… by Brown. And the formerly prosperous member of the SNP’s “arc of prosperity”, Iceland, has been helped by Brown to become, well… a lot less prosperous.

Yet, I do not think Scots will fall for this. Labour/Scottish Labour are a spent force.

Brown is desperate that his party not lose the Glenrothes by-election in November (next door to his own constituency in Fife). Clearly he will do almost anything to achieve that including pushing Iceland to the wall. Q.E.D.

True, in that at the level of deposits Brits had slightly more money deposited in banks’ accounts, but not by much more.

But… that does not include all Icelanders who have their lifetime savings invested in bonds and shares of the banks. Those are *not* covered by deposit insurance. It appears Icelanders will lose all of that. They trusted the banks, right to the end, and are going to lose it all.

In contrast British depositors are guaranteed by the Icelandic government and the UK government (although not true yet of Kaupthing Singer & Friedlander Isle of Man Ltd and Landsbanki Guernsey).

As British savers invested en-mass solely in deposits, not bonds and the like they will get all their money back. Not true of Icelanders who are only covered for bank deposits. A huge number had bought bonds or shares in the banks that are not covered.

You don’t hear them complaining about it too much, but many people in Iceland are losing their life savings because of this, the unfair collapse of the banks.

>The Icelandic government response was to announce
>that Icelandic depositors (i.e. voters) would have
>their deposit guarantees honoured whereas
>foreigners should look elsewhere for redress.

No, completely false. If you really care about the truth, take a look at my posts and those other others here about this:
http://www.icenews.is/index.php/2008/10/16/unbowed-icelandic-pm-sends-a-strong-message-to-uk/

>The government then proceeded to pull overseas funds
>back to Reykjavik.

False. What they did do is ask the banks to sell their foreign assets (i.e. brokerages, etc.) in order that the banks would pay off their own debts (the banks that is) in the UK and elsewhere.

Landsbanki was *not* pulling funds back to Iceland, the exact opposite in fact.

And Kaupthing was pulling huge funds back to the UK subsidiary in order to cover its debts almost to the hour that Kaupthing Singer & Friedlander was seized for ‘insolvency’. Again, I repeat, they were sending money *into* the UK.

Please, reconsider what you think you know about this, and seek the facts before you repeat the big lies put out by the Brown-Darling axis of disinformation.

The Icelandic Government’s claim that it has been unfairly labelled as a terrorist organisation is as dishonest as its financial activities. A large number of foreign depositors held savings with failed Icelandic banks; in fact British savers were owed far more than Icelandic savers. The Icelandic government response was to announce that Icelandic depositors (i.e. voters) would have their deposit guarantees honoured whereas foreigners should look elsewhere for redress. The government then proceeded to pull overseas funds back to Reykjavik. Morally the paying of a privileged few at the expense of the unlucky foreigners is questionable; legally it is the criminal act of fraudulent preference. The UK treasury, identifying that the Icelandic government was engaged in criminal activity, evoked powers available under the Anti-terrorism, Crime and Security Act 2001 (NB the word “Crime” halfway through this title).
It would serve the Icelandic Government better if it dropped the poor victim routine with “Icelanders are hurt that the British government acted under the Anti-terrorism Act” and acted in a more honest manner with something like “We are very sorry for savers, Icelandic and foreign, who have lost money amd are doing all we can to help them” but I guess politicians don’t work like that!