Taking Care Of Business
The BBC reports that Iceland jails former Kaupthing bank bosses:
Four former bosses from the Icelandic bank Kaupthing have been sentenced to between three and five years in prison.
They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch.
They were accused of hiding the fact that a Qatari investor bought a stake in the firm with money lent – illegally – by the bank itself.
Kaupthing collapsed in 2008 under the weight of huge debts.
Iceland covered the insured deposits to the legal limit, but refused to pay for all of the losses and let the banks go bankrupt. Then they filed criminal charges against the bankers.
The Europeans wanted the people of Iceland to cover all of the losses of the depositors, but the people of Iceland voted against that. They didn’t share in the profits, so they had no interest in covering the losses.
What Iceland did is called capitalism. Risk is the ‘invisible hand’. The banks engaged in risky behavior and reality caught up with them. It is pretty stupid to privatize the profits and socialize the risks.