The Icelandic parliament finance committee is meeting today at 14.00 GMT to discuss the changes to the Icesave bill accepted by parliament last night.
The committee started its discussions last night after parliament but had not concluded at 03.00 when it was decided to break for the night. There were parliamentary meetings of each political party’s MPs preceding this afternoon’s meeting, mbl.is reports.
The changes were approved by a large majority and, subject to approval from the finance committee, could enter their third and final parliamentary reading as early as tomorrow.
>or the FSCS decision
“The FSA decision”.
What the UK government says regarding that sealed file:
http://www.number10.gov.uk/Page20205
Again, so what? How is Iceland in any way damaged by the UK covering the cost until Iceland can arrange financing?
Not so. Either the Icelandic government is liable for this amount or it isn’t. The UK covering the compensation payments until that is sorted out doesn’t change a thing. If anything, it improves Iceland’s position because they no longer appear to be stiffing individual savers but rather the big, bullying UK government.
Yes it is. A legal process has been followed in the UK. Until a court rules that that process was in actuality illegal or incorrect (which they may), peons like you & I have to assume it was kosher.
You may have a theory that it wasn’t, but that’s a different matter.
We’ve talked about this before, where I said that you may have a point but that you’d have to show that it was unusual to include that clause.
But here’s another point. Those proceedings are after the fact. It is the Insolvency Act that is being referenced and not the Banking (Special Provisions) Act or the FSCS decision. i.e. the decision to close it down has already been made at that point and we’re just talking about appointment of administrators.
Fisy said:
“I am saying that FCSC did not give Iceland government time to even get money for TIF to pay back money they advanced to UK depositor, it just zoom ahead and did decide that it would make that money adanced into loan to TIF, which is breach of the letter and word of the EU directive.”
As Bromley86 made clear, Iceland can get a loan elsewhere to replace the UK/NL loan, now or in future and this loan still hasn’t come into effect.
There is still nothing stopping Iceland getting the 6billion loan, except the minor fact that nobody will advance it…
Brumely wrote :
>The UK can choose to do whatever it likes. That doesn’t obligate Iceland. So >just because the UK paid not only the FSCS’ share, but also the TIF’s share and, >indeed, the rest up to 100%, that doesn’t mean that Iceland is obligated to pay >any more. Just what they orignially owed.
I am saying that FCSC did not give Iceland government time to even get money for TIF to pay back money they advanced to UK depositor, it just zoom ahead and did decide that it would make that money adanced into loan to TIF, which is breach of the letter and word of the EU directive.
So that is another thing in the way that UK handled this that shows further lack of co-operation and forcing Iceland TIF and government into things without they consent.
Brumely wrote :
> the current reality is that KSF was closed down and that there was a good reason for it
That is just not true. Even the reason ( if there actually is one ) has never been presented let alone justified.
It is assert that it was to protect Kaupthing Edge deposits. But no reasons have been give to back up why exactly FSA decided it was at risk.
So far we have limp wristed ” The FSA has determined that Kaupthing Singer & Friedlander no longer meets its threshold conditions, and is likely to be unable to continue to meet its obligations to depositors. ”
Nice strong word ” likely “, isnt it ?
http://www.hm-treasury.gov.uk/press_102_08.htm
We still don’t know exactly how it was justified because Justice Floyd ordered the court file sealed at time he appointed the adminstrators on 8th October under instruction of UK FSA. And it still is.
http://www.ashurst.com/doc.aspx?id_Resource=2380
But we DO know that other UK high court judges have granted judicial review of the FSA’s use of the ” Northern Rock Act ” in this case to make the transfer order for Kaupthing EDGe to ING.
Something they would not grant for UK’s own Northern Rock bank which was the only other case where the power orders have been used.
Decision of Darling and FSA stunk then and still stinks now.
https://www.icenews.is/index.php/2009/02/16/kaupthing-sweden-sold-to-finns/#comment-65175
https://www.icenews.is/index.php/2009/06/22/haarde-in-dublin-ireland-worse-than-iceland/#comment-82891
Administrators :
http://www.kaupthingsingers.co.uk/Pages/4090
I’ve seen this sort of thing put forward and it simply makes no sense.
The UK can choose to do whatever it likes. That doesn’t obligate Iceland. So just because the UK paid not only the FSCS’ share, but also the TIF’s share and, indeed, the rest up to 100%, that doesn’t mean that Iceland is obligated to pay any more. Just what they orignially owed. Which was, I believe, due early January?
Well, that’s not the case. A loan cannot be made without the terms being agreed by both parties, which we’ve seen has simply not occurred. Unless the agreements signed back in June are legally binding, which I suspect they are not.
BTW, whatever your beliefs, the current reality is that KSF was closed down and that there was a good reason for it. Does that mean that the actual truth is that there was a good, legal reason? No. But, ATM, that’s the case.
Therefore I’ve no idea what you’re going on about when you talk about the credit rating of the Icelandic government. Either they secure a loan elsewhere, or they secure a loan from the UK/NL, or they somehow avoid the debt. As it happens, they’ve tried all three routes but the only one that appears to have concluded is the first. No one anywhere is willing to lend Iceland $6bn.
It’s entirely true that I don’t know the ins and outs of where EEA disputes are tried and that I was misusing the term “EU” to cover everythin EU, EEA, EFTA, Ewhatever. However, as you’ve confirmed, they’re ultimately not tried in Iceland or Switzerland.
Would you care to clarify whay you mean by, “You mean the UK and Holland would with draw from them”? I’ve given a scenario whereby Iceland, however unlikely, could withdraw. I can’t see one where the UK or NL could though.
Hm, Have not been around here for a while but now that I’m back on the ground hate to say this, but the Icesave deal was “closed” long before the current government came into office.
Brumely write:
>Not so. No loan has been given unilaterally. A debt has been created and it is possible to argue that this was done unilaterally by the UK/NL, but that’s a different thing.
You miss my point. My point was that there was no time given first for Iceland to seek other funding and it was done in deviation from Article 10.1-2 of EU directive 94/19/EC which gives Icelands guarantee fund some months to pay.
I now of course that the loan was made and now it exists. Because it was this money paid back to UK and Dutch detail depositors by they countries for the money they deposited in IceSave Landsbanki branches.
I took exception to you making this claim about Iceland government and its credit rating before actions of Darling and Brown putting Landsbanki and Icelandic government on the terrorist list, and taking down Kautphing Singer and Friedlander for no reason.
And that as if it was given a chance as UK did give that loan onto TIF on 4th November 2008. It did not give time for Icelandic government to go out and raise that monies in other way.
It just loans the money to Iceland’s TIF. Do go and read about this Brumley before you go off on wrong tangent.
> If the UK/NL have agreed to go to court, then it will be an EU court and not a hopeful dream of an Icelandic or Swiss court.
>
>Iceland, on the other hand, has the option of withdrawing from the process and daring the EU to punish them.
This is a strange understanding of facts of IceSave and how it will play out assuming the rejection of the amendments just being made Alþingi. As UK and Holland will no doubts interpret them as the counter offer they are adn the IceSave deal as it was made in June will now be off and back to square one and much threatening about EU member ship no doubt as well as already what they are doing with IMF.
( UK and Holland government have acted like that so far. Wish they would prove us wrong. )
Now let us be clear. The ” process ” now we have is one of sovereign dealings between the two member states UK and Holland with Iceland and EFTA state.
This process is based on mutual agreement ( and of course the IMF loan threatening ) but no other ” process “. Any party leave this ” process ” it is back to the state where UK and Holland have to sue somebody with EEA as background.
So .. under that jurisprudense, facts of case are :
–it is an Icelandic bank, registered in Iceland, Landsbanki that took the deposits via its brances in UK and Holland
–it is the Icelandic The Depositors’ and Investors’ Guarantee Fund that is liable under EU directive 94/19/EC
–it is the Icelandic government that EU member states UK and Holland want to accept this liabiility.
Where exactly is the nexus for a UK or Dutch court? If it was subsidiary situation would be differernt but it wasnt it was a branch. If Iceland was EU memb state EU commission would be in charge.
But Iceland isnt so it’s the EFTA Court ” Court of Justice of the European Free Trade Association States ” that has the power to censure and force Iceland to do something, EU commission has not power in that.
EU commission may make the EU directives but it is not the ” legal sovereign ” over Iceland. That is the role of the EFTA Court.
Under EEA which the EU commission and member states did sign this is to be sued in Iceland first then it goes quickly to up to EFTA Court for ruling.
That is a fact.
If you want to see how this kind case plays out, look at previous example case from 2000 :
https://www.icenews.is/index.php/2009/08/14/iceland-pm-defends-parliament’s-icesave-misgivings/#comment-89408
In fairness I have no qualm about impartiality of UK or Dutch courts — that is not my point — my point is one of nexus.
EFTA reaction to the earlier 24hr or less EU ” arbitraton ” kangeroo court showed that they were not satisfied with it either way back in end of November 2008 ( on 4th of November did Árni then Finance Minsiter withdraw Icelandic government politely from it+ ):
https://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87719
+https://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87419
Racal said:
“Could someone please explain to me what’s the deal with this “Icesave”, cause I didn’t quite follow the whole plot and I don’t understand everything…”
Icesave is only a small part of this, to understand what stands behind the crash of the banking system and how all this debt was created you need to watch this
http://www.youtube.com/watch?v=1gKX9TWRyfs
what is happening now is that the IMF is forcing Iceland to bankruptcy to get control of people and assets here, we can give in by signing contracts that were designed to destroy us, like the IceSave deal, or we can declare war against the system and individuals and company’s who are behind IMF and this system, and also more or less control politics and media,
my “money” is on War,
in my mind its the only option.
>6. Iceland has spent the past 11 months trying to avoid giving an unequivocal guarantee.
And just to be even more clear — since February 1st in fact idiot Red-Green government led by traitor to his supporters Steingrímur J. has been trying to say yes to pay completely exactly what UK and NL asked for even if terms ( 5.5% interest, no cap based on GDP ) would clearly have bancrupted our state 2016 onwards as Bjarni did point our in nice detail :
https://www.icenews.is/index.php/2009/07/01/iceland-icesave-deal-“there-is-no-plan-b”/#comment-83787
But before that, from October 2008 until end of January 2009 the Geir Haarde government ( although not the Social Democrat Foreign Minister in that coalition Ingibjörg Sólrún ) was trying to get this matter of 94/19/EC libility into impartial court i.e. in front of impartial third-party before accepting liability for the government as opposed to agreeing to support the TIF fund in raising money for that :
https://www.icenews.is/index.php/2008/11/16/icesave-agreement-finally-presented/#comment-49368
Since mid – late June 2009 when people actually see what this Icesave agreement — signed in June by Red-Green Icelandic government — is made of they have been strongly against it.
Not because we do not want to pay out debts ( even unfair ones that come as much from EU burecrats failure as our own bankers ). But because the deal is like usury.
Thankthe gods any state guarantee has to be agreement by our parliament+ so that opposition parties made sure ammendments are made that are reasonable.
Without this idiot Red-Green EU at any cost government would have kicked future generation tax payer right over the waterfall and country into bankcrupcy by 2016.
Now in August we are back to situation of before February when more reasonable idea about IceSave settlement is coming from Icelandic side.
This waste of time from February until July when Red-Green government led by Jóhanna ” there is no Plan B” Sigurðardóttir did try and force this through is now over thank the gods.
Politicially they will pay ultimate price soon because of this horrible opportunism of Social Democrat in breaking the coalitiion with Independence Party and forcing the early expensive election purely for they own party political aims. And Steingrímur J. in putting wanting his politicial power above his principals.
+https://www.icenews.is/index.php/2009/08/14/iceland-pm-defends-parliament’s-icesave-misgivings/#comment-89406
You’re not being fair Fisy.
No, he means that Iceland may withdraw from it. If the UK/NL have agreed to go to court, then it will be an EU court and not a hopeful dream of an Icelandic or Swiss court. They have to abide by the court ruling if they wish to remain unsanctioned and within the EU. Which they do.
Iceland, on the other hand, has the option of withdrawing from the process and daring the EU to punish them. Given Iceland’s history of playing the “bully” card, that is at least possible if the government of Iceland decides that EEA membership is not worth being forced to accept the EEA guarantee.
Not so. No loan has been given unilaterally. A debt has been created and it is possible to argue that this was done unilaterally by the UK/NL, but that’s a different thing.
There is no requirement by either the UK or the NL that Iceland borrow money from them to pay them back. If Iceland can secure $5bn from Russia, then that’d be just as welcome. More so in fact as there would be no question mark over whether Iceland can repay it (well, at least not as far as the UK/NL are concerned :) ).
But they can’t, hence my statement. And I thought you worked for a bank :D .
And, to counter-clarify, I still disute your reasoning here [insert our transcript argument].
>It’s also quite possible that, depending on progress/outcome, Iceland would withdraw from court proceedings before the judgement and/or not recognise the judgement.
You mean the UK and Holland would with draw from them.
Given they track record in this whole matter that is far the most likely situation.
And it is also most likely that they will be suing TIF in court in Iceland.
But you never know the UK and Holland might wake up to worldwide court of the public opinion and instead agree to arbitrate this in neutral venue like Switzerland with some judges that know the case law.
7. >This loan is necessary because Iceland cannot secure financing elsewhere.
This again not entirely is true. The loan was given unilaterally ( especially by UK government ) and so Iceland was not given chance to go and seek loan from any where else.
Bear in mind that before action of Darling and Brown on October 8th http://www.indefence.is/News/News/~/NewsId/13
Iceland sovereign debt rating was excellent before http://www.sedlabanki.is/?PageID=789+ this actions but on same day Darling did announce the unilateral guarantee extension of all monies.
Icelandic state was not given a chance to take loan from any where else before UK and Holland did payout.
4 November 2008 UK Financial Services Compensation Scheme (FSCS) did decide to unlateraly deviate from Article 10.1-2 of EU directive 94/19/EC and “with the knowledge of TIF” but not it seems actually with any agreement of Icelandic compensation fund ( TIF ) :
https://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/comment-page-4/#comment-87083
So answer is that Iceland did not get the chance to secure funding elsewhere before UK made the loan.
They did already have approval from IMF board by end of October 2008 for its Stand-By Arrangement :
http://www.imf.org/external/np/sec/pr/2008/pr08256.htm
+ Table 4. Developments in Standard & Poor’s sovereign credit ratings of Iceland
“The dispute will go to court which will likely rule that the Icelandic state needs to back the guarantee, but there is a good possibility that they will win.”
It’s also quite possible that, depending on progress/outcome, Iceland would withdraw from court proceedings before the judgement and/or not recognise the judgement. It could then be up to the other parties to punish Iceland as they think appropriate.
A fairly good summery Brumley. But of course some clarification needed.
>3. Before the collapse, everyone accepted that this involved an Icelandic state guarantee. After the collapse, Iceland has been looking for a way out (with some justification, as the EU legislation is not explicit on the subject).
For ” before collapse ” and ” after collapse ” replace with ” before Brown and Darling actions in October 2008 ” and ” after Brown and Darling actions ..” :
https://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/comment-page-4/#comment-89416
I would also not say looking for a way out of the obligation.
Instead Icelandic people are looking to get Iceland state’s obligations under 94/19/EC and based on new situation caused by Ireland 100% guarantee of own banks vs limited guarantee for foreign branches, etc. * in front * of impartial 3rd party ( i.e. judge) for ruling.
Based on huge pressure from EU against this and holding back of IMF loan due to pressure from UK Holland and Germany this was not possible in October / Noveember under Geir Haarde led government.
Then after 1st February the Red-Green minority coalition was put in by President and they started whole negotiation based on politicial idea of paying anything that UK and Holland asked.
And they gave task to Svavar Gestsson, ambassador :
https://www.icenews.is/index.php/2009/08/07/icesave-deal-still-controversial-in-iceland-and-still-not-green-lighted/#comment-88366.
In fact before recent sense forced into them by other member of Icleandic parliement, Red-Green idiot government was going to pay completely exactly what UK and NL asked for even if terms ( 5.5% interest, no cap based on GDP ) would clearly have bancrupted our state and all this without this going in front of any judge or other impartial third party.
Rough summary:
1. Icesave (Landsbanki) failed. They’d taken deposits in the UK & NL, as well as in Iceland. It’d operated as a branch regulated and guaranteed by Iceland, rather than as a UK or a NL bank regulated by the UK/NL.
2. The bank accounts were guaranteed 20k euros minimum under EEA/EU legislation. Because of the small size of Iceland, this is a large amount.
3. Before the collapse, everyone accepted that this involved an Icelandic state guarantee. After the collapse, Iceland has been looking for a way out (with some justification, as the EU legislation is not explicit on the subject).
4. The UK & NL governments have stepped in and covered the guarantee in their countries. They’ve also guaranteed further amounts (UK 100%, NL up to 100k euros). Iceland has guaranteed its own depositors 100%.
5. The EU (and most especially the UK & NL) have insisted that Iceland is responsible for the minimium guarantee. They have succeeded in linking the provision of IMF/Nordic country loans that Iceland needs to get its economy going again to Iceland accepting the liability.
6. Iceland has spent the past 11 months trying to avoid giving an unequivocal guarantee.
7. The UK/NL & Iceland signed an agreement back in June that the former would lend the latter the money to pay the guarantee. This loan is necessary because Iceland cannot secure financing elsewhere. The loan agreements explicitly state that the guarantee becomes a state debt.
8. However, the Icelandic parliament (Althingi) has not ratified this agreement. A series of amendments have been proposed in the Althingi which, whether they’re a good idea or not, greatly change the agreement.
9. (This point is speculation, but seems likely). The new agreement will not be acceptable to the UK/NL. The dispute will go to court which will likely rule that the Icelandic state needs to back the guarantee, but there is a good possibility that they will win.
10. The risk for Iceland is that they’ll not get the IMF/Nordic loans and will be ruled against anyway in court.
Racal – There’s a summary here:
http://en.wikipedia.org/wiki/Icesave_dispute
Could someone please explain to me what’s the deal with this “Icesave”, cause I didn’t quite follow the whole plot and I don’t understand everything…
From what I got, this is a plan to repay their money to British and Dutch savers who lost all their money in the Icasave Bank? And the bank has been nationalized, so the Icelandic State, and indirectly the Icelanders will then have to support that repayment? I understand and I agree that Icelandic people are not responsible for that, but is there another way for the savers to get repaid in that plan?
I’m sorry if I said something outrageous or if I’m mistaken, but I’m not from Iceland (nor from UK or Netherlands), and there’s nothing in the news about that here… Thanks! :)
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So much effort to produce a counteroffer without any feedback from the counterparties. I wonder how many of those politicians really think the provisos will be accepted by UK and Netherlands.