Tuesday, December 17, 2013

Iceland sends another bankster to jail, USA has many more crooks but...

The fact that Iceland is treating the banksters like more or less common criminals points to a cultural feature of a small Nordic country.  For example, the small country of Sweden has an large complex industrial culture that encompasses automobile, truck, bus, and ship manufacture, specialty steel, telecommunication equipment, and a host of smaller enterprises that fill in the gaps.  Not surprisingly in a country of only 10 million, everyone knows someone who works for a living doing tasks that are often FAR more difficult than anything they do in the financial world.  Iceland has figured out how to survive a very difficult climate by tapping geothermal resources and other amazing feats with a population of only 321,000.  This fact leads to the cultural question, Why should we treat the financial services business as special and privileged?

This question is fading in the Nordic countries as they slowly lose industrial activity to Asia and the teachings of neoliberalism becomes more mainstream, but there is still enough animus towards the idea that banking is inherently elite to put banksters in jail.  I approve and for those reasons!

Iceland jails former Kaupthing bank bosses

12 December 2013

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.

For years, Kaupthing and other Icelandic banks had aggressively pursued overseas expansion plans, but when they went into administration, they brought the country's economy to its knees.

Just a few weeks before the collapse, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al-Thani had bought a 5.1% stake during the financial crisis in 2008.

The move was seen as a confidence boost for the bank.

Legal Costs

Hreidar Mar Sigurdsson, the former chief executive, received five and a half years, while Sigurdur Einarsson, former chairman of the board, was sentenced to five years in jail.

These are the heaviest sentences for financial fraud in Iceland's history.

The court gave Olafur Olafsson, one of the majority owners three years and Magnus Gudmundsson the former chief executive of the Luxembourg branch, three and a half years.

None of them were in court for the decision but it is expected that they will appeal.

The four were also made to pay their own legal costs for the case, which amount to millions of pounds.

The special prosecutor, Olafur Hauksson, said the deal had influenced the bank's share price. He also said the loans provided for the deal were illegal.

Mr Hauksson told the BBC that there was still another, bigger case against Kaupthing Bank ongoing, in which it is accused of market manipulation. It is due to come to court at the end of January.


Kaupthing Singer and Friedlander was the UK arm of Kaupthing Bank - the largest of the Icelandic banks that went into administration in October 2008.

According to the Icelandic media, the charges state that the deal was done by first depositing a loan from Kaupthing bank into shell companies in the British Virgin Islands.

The money then went from there to a Cypriot based company called Choice, which was owned by Olafsson, Sheikh al-Thani and al-Thani's adviser.

From there it was moved to another firm called Q Iceland Finance, also owned by al-Thani, and then finally ended up back in the bank to pay for the shares.

It was never publicly stated that the company owned by Olafsson was party to the deal.

Sheikh al-Thani did not testify but he gave a statement to the prosecutors. In it, he said he did not know of any direct involvement by Olafsson to the deal.

Al-Thani's lawyers, who made an agreement with Kaupthing's administrators, said he considered himself to have been deceived. more
This is just a small taste of a great article on the crimes of Bank of America.  If USA were to put the banksters into jail like they do in Iceland, we would have to release all the pot smokers to make space.  In USA, we give finance both vast wealth and political power plus cultural legitimacy that is so overwhelming, most observers believe that finance IS capitalism.  As someone who makes a serious effort to follow non-financial economic news in USA, I can assure everyone that the cultural dominance of the moneychangers is almost total.

Secret Inside BofA Office of CEO Stymied Needy Homeowners

By Hugh Son Dec 15, 2013

Isabel Santamaria thought she finally caught a break in her effort to save her Florida home from foreclosure after nine frustrating months: She reached Bank of America Corp.’s Office of the CEO and President.

What the mother of two autistic children didn’t know is that her case would find its way to contractors, including Urban Lending Solutions in Broomfield, Colorado, far from the bank’s headquarters in Charlotte, North Carolina. Bank of America hired the firm founded by Chuck Sanders, a former Pittsburgh Steelers running back, to clear a backlog of complaints about a federal program designed to prevent foreclosures.

“It felt like a big deal, reaching the CEO’s office,” Santamaria, 43, said of having her June 2010 call escalated to what she was told was the bank’s top level. “It only happened because I complained to my congressman, the attorney general, television stations. They only put you there if you make a big stink, but once you’re there, they still don’t help you.”

Bank of America, led by Chief Executive Officer Brian T. Moynihan, faced more than 15,000 complaints in 2010 from its role in the government’s Home Affordable Modification Program. Urban Lending, one of the vendors brought in to handle grievances from lawmakers and regulators on behalf of borrowers, also operated a mail-processing center for HAMP documents.

Paperwork Requests

Instead of helping homeowners as promised under agreements with the U.S. Treasury Department, Bank of America stalled them with repeated requests for paperwork and incorrect income calculations, according to nine former Urban Lending employees. Some borrowers were sent into foreclosure or pricier loan modifications padded with fees resulting from the delays, according to the people, all but two of whom asked to remain anonymous because they signed confidentiality agreements.

HAMP was the centerpiece of President Barack Obama’s attempt to prevent foreclosures by lowering distressed borrowers’ mortgage payments. Under the program, homeowners are given trial modifications to prove they can make reduced payments before the changes become permanent.

The accounts of the former employees help explain why Obama’s plan fell far short of the 3 million averted foreclosures targeted in 2009. Relying on the same industry that sold shoddy mortgages during the housing bubble and improperly sped foreclosures afterward, HAMP resulted in still-active modifications for 905,663 homeowners as of the end of August, or 13 percent of the 6.9 million people who applied. much more


  1. Meanwhile, in Sweden, authorities just fined a man over $600,000 for illegally uploading a movie.

    Just sayin'....

  2. People who do creative work tend to much more concerned about issues of intellectual property. And the Swedes have reason to be touchy about intellectual ripoffs. For example, the layout and design features of the 1970 Saab 99 have become the template for about 80% of the cars made each year worldwide. Saab was just swamped by this tide and their automotive division has been through bankruptcy while Trollhatten where Saabs were built is on its way to becoming another industrial ghost town. The folks that figured out this genius template believe this is not an appropriate outcome for all their hard work. So intellectual property pirates become the bad guys.

    $600,000 may be way out of line for the crime, but the anger over the subject is legitimate.

  3. US District Judge for the Southern District of New York Jed S. Rakoff - who stunned Wall Street by rejecting a proposed DoJ slap on the wrist of JP Morgan Chase last year, has written an essay in the NU Review of Books, The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?


    I really don't recall a sitting judge venting in public like this.