The U.S. isn’t the only country struggling to serve justice on those who cut corners in the credit boom.
Do perp walks in Iceland count? The furor over Goldman Sachs notwithstanding, U.S. authorities have yet to convict any financial services industry bigwigs for wrongdoing in the housing bust and market meltdown a few years back. To say this rankles some observers is an understatement.
But police in Iceland are on the case. They arrested Hreidar Mar Sigurdsson, the former president of Iceland’s biggest bank, Kaupthing, accusing him of embezzlement and other misdeeds. It’s the first big banking bust since the failure of Kaupthing and two other big Icelandic banks sent the nation’s economy into free fall two years ago, the BBC reports.
Kaupthing was seized by Iceland’s government in October 2008, after years of debt-fueled expansion left both the bank and the entire Iceland economy massively overextended. Iceland’s growth before the crisis was often cited as a success story by the taxes are killing us crowd, but the implosion of the global financial system left Iceland’s citizens with a giant tab for a long financial sector’s party.
This gave policymakers, whose ineptitude had allowed the problems to take root, an opportunity to share some new nuggets of wisdom.
“What we have learned from this whole exercise over the last few years is that it is not wise for a small country to try to take a leading role in international banking,” then Prime Minister Geir Haarde said then.
The problems in the U.S. and other developed economies pale in comparison to what went on in Iceland and what is now happening in Greece, obviously. But given the size of the bailouts and the backlash that is still building here, perhaps we are learning that it isn’t wise even for large countries to take the leading role in international banking.