Icesave and the collapse of EU regulations
A very interesting radio show on RUV explained the situation of why the Icesave deal is so bad, and in fact out of touch with reality. The Mirror (Spegillinn in Icelandic) is the name of the show, and it is probably the only piece of media wort listening to or reading in the whole Icelandic media landscape. A shame, but true non the less.
Sigrún Davíðsdóttir is the RUV reporter in London and she has constantly given outstanding reports over since the economy crashed here in Iceland over eight months ago. She is the queen of the Icelandic media by far.
She claims that the FSA in the UK could have acted to stop the Icesave when it looked to good to be true and the Icelandic system was out of all bounds and way out of proportion. The FSA claim afterwards that they couldn’t have done anything to prevent this disaster from happening. I have said on this blogsite before that they must have some responsibility, it’s their job to act if things are not right. Daviðsdóttir agrees with me on this one and claims the FSA excuses are simply not true.
Accrording to Davíðsdóttir the Icelandic banks had been discussed by House of Lords in the British Parliament in July 2008 because of serious and widespread worries about the financial situation of the banks and the Icelandic system.
She also said that a spokesperson for the British government said that the FSA are responsable for how bank outlets behave and the FSA should keep an eye out for fianancial status and fraudulant activity, and that the FSA is in reglular contact with its counterpart in the homeland of the bank. According to this reply Davíðsdóttir say´s that according to the best possible information that there was no will or attention brought to this case for the single reason that the money involved where such a fraction of the British financial markt. In other words, it was just pocket change for them.
The failure of EU regulations:
Davíðsdóttir also tells of a report from a Swedish Central Bank employee from November 2008 where he claims that weak and insufficient EU regulations should punish Iceland in a way they were never designed to do. This has been talked about a lot here in Iceland. Eirikur Bergman wrote about this in the Guardian I seem to remember, for example. The fact is that the rules about the money insurance are made to hold if a bank goes bankrupt like happens sometimes, but they where never designed to be used in the very strange situation of a total collapse of a whole system. The rules on that event are not in place.
It seems very clear that the EU regulations are designed to help people to get their money back if a bank goes bankrupt, but I seriously doubt that they are designed to put a nation into slavery or directly punish it with threats like not lending them anything, not assisting them with anything. By making Iceland into Cuba or North Korea by sanctions and financial restrictions is in direct conflict with the philosophy of the EU, and in fact all its regulations as well.
The Swedish banker also claims that most of the responsibility is on the Icesave directors and bankers as well as the Icelandic politicians who let this go on and ignore warnings. The FSA and other regulatory parties have a heavy responsibilty too. But most of all the regulatory failure, or bankruptcy of the EU is not Iceland´s fault, but Iceland still has to pay for that.
The Swedish banker also claims that the insurance fund that should cover the loss should be funded by the banks, and not the state. The definition of the EU regulations about bank outlets simply dont apply when the bank outlet far exceeds the homelands financial system and therefor puts in in grave danger of collapse.
He also claims that the British government and the FSA could for example have advertised that the Icelandic system was weak, but instead Icesave was allowed to advertise that it was just as safe as the British banks accounts. This is a clear case of the FSA responsibility. Their actions to do nothing when they knew the situation well is actually devastating to say the least, and not to mention the classical and clear indication of things not being as they should be were the very high interest rates. Rates who looked clearly lika a big Ponzi scheme. Way out of proportion compared with other banks in the UK.
The Swedish banker deducts that the nations that let the Icelanic bank outlets operate should shoulder a big part of the responsibility instead of the Icelandic government and therefor the Icelandic taxpayer who is not loosing everything because of this. He also claims that the EU should give Iceland more favourable assistance than they do now.
The assistance is none in fact. The EU have no legal responsibility to help, but they have a moral duty to do so. In the light of total regulatory failure one small nation should not suffer for the actions of a few bankers.
Popularity: 5% [?]
The British FSA if they were any good at their job would have dealt with the British Banks!! But its not their responsibility.
The point is that the Icelandic governement, Icelandic ‘FSA’ and the Icelandic Banks – CEOs etc – were insisting how strong and solvent they were. (The Danish were told to ’shut up’ by an idiot minister whos husband was insider dealing.)
Meanwhile a small group of Icelandic people were cleaning out all the assets on a massive scale, and we know who they are!
I so totally agree with you Peter..
They should all be punished. Keep an eye out for the next blog entries, I will be talking about the responsibility the politicians never take while supporting criminals and corruption.
and thanks for the comment Peter
[...] on Icesave and the EU regulations I wrote about the EU regulations about two weeks ago. See the post here. A new argument has been brewing within me and probably many others as [...]
Name the suspects for the record. Root out and Remove all suspects, but more corruption will replace them so the system in place much be replaced with one by honest people of Iceland. As you see now Iceland is targeted, being raided and will soon be totally conquered if major change is ignored. Iceland’s currency, just as the American Dollar, is worth nothing in and of itself and both will fall and it’s people ruled by the Lords. There is only one way to stabilize the currency and that is to have currency that has worth in and of itself. There is a form of credit known as barter pledges if no other form of currency will work. Ingólfur Arnarsson didn’t need banks and neither do you. Use your imagination. Trade amongst yourselves till the world can rid itself of this CENTRAL BANK problem that is taking us over one by one.
Be aware of assassins from within and without. John F Kennedy (Assassinated American President) had this to say a few weeks before he was assassinated. Learn and do exactly as he instructs Immediately. Your survival depends on it if it is not already too late. “My topic tonight is a more sober one of concern to publishers as well as editors.
I want to talk about our common responsibilities in the face of a common danger. The events of recent weeks may have helped to illuminate that challenge for some; but the dimensions of its threat have loomed large on the horizon for many years. Whatever our hopes may be for the future–for reducing this threat or living with it–there is no escaping either the gravity or the totality of its challenge to our survival and to our security–a challenge that confronts us in unaccustomed ways in every sphere of human activity.
This deadly challenge imposes upon our society two requirements of direct concern both to the press and to the President–two requirements that may seem almost contradictory in tone, but which must be reconciled and fulfilled if we are to meet this national peril. I refer, first, to the need for a far greater public information; and, second, to the need for far greater official secrecy.
I
The very word “secrecy” is repugnant in a free and open society; and we are as a people inherently and historically opposed to secret societies, to secret oaths and to secret proceedings. We decided long ago that the dangers of excessive and unwarranted concealment of pertinent facts far outweighed the dangers which are cited to justify it. Even today, there is little value in opposing the threat of a closed society by imitating its arbitrary restrictions. Even today, there is little value in insuring the survival of our nation if our traditions do not survive with it. And there is very grave danger that an announced need for increased security will be seized upon by those anxious to expand its meaning to the very limits of official censorship and concealment. That I do not intend to permit to the extent that it is in my control. And no official of my Administration, whether his rank is high or low, civilian or military, should interpret my words here tonight as an excuse to censor the news, to stifle dissent, to cover up our mistakes or to withhold from the press and the public the facts they deserve to know.
But I do ask every publisher, every editor, and every newsman in the nation to reexamine his own standards, and to recognize the nature of our country’s peril. In time of war, the government and the press have customarily joined in an effort based largely on self-discipline, to prevent unauthorized disclosures to the enemy. In time of “clear and present danger,” the courts have held that even the privileged rights of the First Amendment must yield to the public’s need for national security.
Today no war has been declared–and however fierce the struggle may be, it may never be declared in the traditional fashion. Our way of life is under attack. Those who make themselves our enemy are advancing around the globe. The survival of our friends is in danger. And yet no war has been declared, no borders have been crossed by marching troops, no missiles have been fired.
If the press is awaiting a declaration of war before it imposes the self-discipline of combat conditions, then I can only say that no war ever posed a greater threat to our security. If you are awaiting a finding of “clear and present danger,” then I can only say that the danger has never been more clear and its presence has never been more imminent.
It requires a change in outlook, a change in tactics, a change in missions–by the government, by the people, by every businessman or labor leader, and by every newspaper. For we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence–on infiltration instead of invasion, on subversion instead of elections, on intimidation instead of free choice, on guerrillas by night instead of armies by day. It is a system which has conscripted vast human and material resources into the building of a tightly knit, highly efficient machine that combines military, diplomatic, intelligence, economic, scientific and political operations.
Its preparations are concealed, not published. Its mistakes are buried, not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed. It conducts the Cold War, in short, with a war-time discipline no democracy would ever hope or wish to match.
Nevertheless, every democracy recognizes the necessary restraints of national security–and the question remains whether those restraints need to be more strictly observed if we are to oppose this kind of attack as well as outright invasion.
For the facts of the matter are that this nation’s foes have openly boasted of acquiring through our newspapers information they would otherwise hire agents to acquire through theft, bribery or espionage; that details of this nation’s covert preparations to counter the enemy’s covert operations have been available to every newspaper reader, friend and foe alike; that the size, the strength, the location and the nature of our forces and weapons, and our plans and strategy for their use, have all been pinpointed in the press and other news media to a degree sufficient to satisfy any foreign power; and that, in at least in one case, the publication of details concerning a secret mechanism whereby satellites were followed required its alteration at the expense of considerable time and money.
The newspapers which printed these stories were loyal, patriotic, responsible and well-meaning. Had we been engaged in open warfare, they undoubtedly would not have published such items. But in the absence of open warfare, they recognized only the tests of journalism and not the tests of national security. And my question tonight is whether additional tests should not now be adopted.
The question is for you alone to answer. No public official should answer it for you. No governmental plan should impose its restraints against your will. But I would be failing in my duty to the nation, in considering all of the responsibilities that we now bear and all of the means at hand to meet those responsibilities, if I did not commend this problem to your attention, and urge its thoughtful consideration.
On many earlier occasions, I have said–and your newspapers have constantly said–that these are times that appeal to every citizen’s sense of sacrifice and self-discipline. They call out to every citizen to weigh his rights and comforts against his obligations to the common good. I cannot now believe that those citizens who serve in the newspaper business consider themselves exempt from that appeal.
I have no intention of establishing a new Office of War Information to govern the flow of news. I am not suggesting any new forms of censorship or any new types of security classifications. I have no easy answer to the dilemma that I have posed, and would not seek to impose it if I had one. But I am asking the members of the newspaper profession and the industry in this country to reexamine their own responsibilities, to consider the degree and the nature of the present danger, and to heed the duty of self-restraint which that danger imposes upon us all.
Every newspaper now asks itself, with respect to every story: “Is it news?” All I suggest is that you add the question: “Is it in the interest of the national security?” And I hope that every group in America–unions and businessmen and public officials at every level– will ask the same question of their endeavors, and subject their actions to the same exacting tests.
And should the press of America consider and recommend the voluntary assumption of specific new steps or machinery, I can assure you that we will cooperate whole-heartedly with those recommendations.
Perhaps there will be no recommendations. Perhaps there is no answer to the dilemma faced by a free and open society in a cold and secret war. In times of peace, any discussion of this subject, and any action that results, are both painful and without precedent. But this is a time of peace and peril which knows no precedent in history.
II
It is the unprecedented nature of this challenge that also gives rise to your second obligation–an obligation which I share. And that is our obligation to inform and alert the American people–to make certain that they possess all the facts that they need, and understand them as well–the perils, the prospects, the purposes of our program and the choices that we face.
No President should fear public scrutiny of his program. For from that scrutiny comes understanding; and from that understanding comes support or opposition. And both are necessary. I am not asking your newspapers to support the Administration, but I am asking your help in the tremendous task of informing and alerting the American people. For I have complete confidence in the response and dedication of our citizens whenever they are fully informed.
I not only could not stifle controversy among your readers–I welcome it. This Administration intends to be candid about its errors; for as a wise man once said: “An error does not become a mistake until you refuse to correct it.” We intend to accept full responsibility for our errors; and we expect you to point them out when we miss them.
Without debate, without criticism, no Administration and no country can succeed–and no republic can survive. That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy. And that is why our press was protected by the First Amendment– the only business in America specifically protected by the Constitution- -not primarily to amuse and entertain, not to emphasize the trivial and the sentimental, not to simply “give the public what it wants”–but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mold, educate and sometimes even anger public opinion.
This means greater coverage and analysis of international news–for it is no longer far away and foreign but close at hand and local. It means greater attention to improved understanding of the news as well as improved transmission. And it means, finally, that government at all levels, must meet its obligation to provide you with the fullest possible information outside the narrowest limits of national security–and we intend to do it.
III
It was early in the Seventeenth Century that Francis Bacon remarked on three recent inventions already transforming the world: the compass, gunpowder and the printing press. Now the links between the nations first forged by the compass have made us all citizens of the world, the hopes and threats of one becoming the hopes and threats of us all. In that one world’s efforts to live together, the evolution of gunpowder to its ultimate limit has warned mankind of the terrible consequences of failure.
And so it is to the printing press–to the recorder of man’s deeds, the keeper of his conscience, the courier of his news–that we look for strength and assistance, confident that with your help man will be what he was born to be: free and independent.”
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