iceland bank fraud jail term bailout

Iceland Jailed Banksters + More Moves toward Justice
too big to fail merger tarp guarantees secret loans documentaries real estate

The Top 20 Social Change Documentaries of 2012

Banks aren't above the law in some places, unlike in the US. But you can see what to do about it below. We excerpt three 2012/13 articles from: (1) Reuters, Dec 28, on Iceland; (2) Rolling Stone, Jan 4, on the Bailout by M. Taibbi; and (3) Films For Action, Dec 15, on documentaries by T. Hjersted.

by Reuters, by Matt Taibbi, and by Tim Hjersted

Two former executives at an Icelandic bank which collapsed in the 2008 financial meltdown were sentenced to jail on fraud which led to a 53 million euro loss, in the first major trial of Icelandic bankers linked to the crisis.

All three of the small North Atlantic island's top banks collapsed in quick succession in October 2008 due to big debts incurred during a rapid overseas expansion.

Glitnir was the first to fall after the collapse of Lehman Brothers caused international credit markets to freeze up.

A Reykjavik court sentenced Glitnir's former chief executive, Larus Welding, and former head of corporate finance, Gudmundur Hjaltason, each to nine months in jail, of which six months were suspended for two years. They had denied the charges.

Prosecutors said the two approved a loan to a company which owned shares in Glitnir so that the company could in turn repay a debt to Morgan Stanley.

The decision, taken outside the regular decision-making process, meant Glitnir was too exposed to the company and cost the bank at least 53.7 million euros ($71 million), the prosecution said.

The sentence was less than the jail terms of at least five years demanded by Iceland's special prosecutor, who is looking into alleged wrongdoing connected to the crisis.

To read more

JJS: From the law applying to all to those above the law.

Instead of using the bailout money as promised -– to jump-start the economy – Wall Street used the funds to subsidize a string of finance mergers, from the Chase-Bear Stearns deal to the Wells Fargo-­Wachovia merger to Bank of America's acquisition of Merrill Lynch.

The biggest drop in lending -– 3.1 percent -– came from the biggest bailout recipient, Citigroup. A year later, lending among the nine biggest TARP recipients "did not, in fact, increase."

Citi in 2007 paid out the third-highest dividend in America –- $10.7 billion –- despite losing $9.8 billion in the fourth quarter of that year alone. A month or so after the bailout team called the top nine banks "healthy," Citi –- which was in the midst of posting a quarterly loss of more than $17 billion –- received another $20 billion in cash and more than $300 billion in guarantees.

Companies like AIG, GM, and Citigroup were given tens of billions of deferred tax assets –- allowing them to carry losses from 2008 forward to offset future profits and keep future tax bills down. Official estimates of the bailout's costs do not include such ongoing giveaways. Citigroup boasts more than $50 billion in deferred taxes -– which is how the firm managed to receive a $144 million credit last year.

Goldman Sachs, which had made such a big show of being reluctant about accepting $10 billion in TARP money, was quick to cash in on the secret loans being offered by the Fed. By the end of 2008, Goldman had snarfed up $34 billion in federal loans -– and it was paying an interest rate of as low as just 0.01 percent for the huge cash infusion. Yet that funding was never disclosed to shareholders or taxpayers.

They created a two-tiered financial market, divided between those who knew the truth about how bad things were and those who did not.

About a third of the 332 companies that took part in the next bailout used some of the money to repay their original TARP loans. Banks that still owed TARP money essentially took out cheaper loans from the government to repay their more expensive TARP loans -– a move that conveniently exempted them from the limits on executive bonuses mandated by the bailout.

All of this -– the willingness to call dying banks healthy, the sham stress tests, the failure to enforce bonus rules, the indifference to public disclosure, not to mention the lack of criminal investigations into fraud -– comprised the largest and most valuable bailout of all. Now lenders are more willing to lend to a bank with implied government backing than to companies who "must borrow based on their own credit worthiness." That's an annual subsidy of $34 billion a year to the nation's 18 biggest banks.

Banks have moved into riskier and more speculative investments, from mortgage­backed securities to payday loans, the sleaziest end of the financial system. In 2011, banks increased their investments in junk-rated companies by 74 percent, and began systematically easing their lending standards in search of more high-yield customers. This is a virtual repeat of the financial crisis.

To read more

JJS: From the banking cancer to a land-based reform.

With most of the bases covered for all of the major problems we're facing, more and more films this year focused on the solutions side of the equation, giving a voice to the uplifting stories of people working to realize their dreams of a thriving, sustainable world.

For the films that focused on the problems-side, it's no longer enough to advance the well-trodden ideas of the past. It's a time of creative destruction, where all of our assumptions about the world are no longer taken for granted, giving air to fresh, radical new perspectives and ideas.

The mainstream media may not be talking about it -- they, too, like the political elites whose interests they favor, still continue to promote the status quo narratives of the past.

If you're feeling pumped up by these films and want to channel that energy into something positive, check out our guide to hosting public film screenings, and consider using our action template as a spring-board to launch a community initiative in your home town.

#2. Real Estate 4 Ransom outlines a genuine alternative to the global property speculation that forced so many into debt. Doubling the pressure, the tax game has become just that, with tax havens a favoured option for the wealthy. The result - we are taxing the wrong things, causing more problems whilst bankrupting once proud economies.

To read more

JJS: When the public recovers the socially-generated value of locations, then it’s not available to be included in the price of a house. Thus site value is kept out of mortgages, so banks don’t get it and aren’t able to, in effect, capture land rent. Because all the money we spend for the sites and resources we use is so huge, the biggest single stream in the economy, it’d be a huge loss to banksters if society recovered that which is rightfully theirs. And without so many trillions tempting greedy banksters, there’d be far fewer scandals of much smaller scale. And people might learn to trust bankers and brokers again.

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Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

After Arresting Corrupt Bankers
http://www.progress.org/2012/recovery.htm

Iceland Arrested Bankers, Look What Happened
http://www.progress.org/2012/libor.htm

Banks on Ice
http://www.progress.org/2011/fold718.htm

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