Iceland plans vote on bank payout

[dipsydoodle]

Source: BBC News

Iceland's president has announced plans to hold a referendum on the payment of compensation resulting from the collapse of the country's banks.

President Olafur Ragnar Grimmson said he would not sign a controversial bill to repay $5bn lost by UK and Dutch savers in Icesave accounts.

The government has seen strong domestic opposition to the bill.

The Landsbanki bank, which ran the Icesave accounts, collapsed at the height of the banking crisis in 2008.

Read more: http://news.bbc.co.uk/1/hi/business/8441312.stm

[zeemike]

1. I am totally ignorant of the financial system, but I have a question

Where did the money go that was lost?
Did it go to Icelanders?
And if not why should they pay?

[BR_Parkway]

2. That would be my question as well - I'm pretty sure it didn't go to

the people who they want to pay it back

[Lautremont]

3. In a nutshell,

the country's financial elite used the people's money to buy up cheap cash (Swiss Francs, yen), invested it heavily offshore and then took a huge bath when the economy tanked and interest rates on the formerly cheap currency skyrocketed. But the Icelandic banks had accounts open to people in foreign lands, principally the UK and the Netherlands, and these funds were used too. This is what has to be paid back, and the Icelanders are right to be pissed off about it. They were betrayed and robbed as much as the foreigners were.

[Robbien]

4. True. Icelanders want bank creditors to eat the loss of bank failures.

Putting Icelanders into debt slavery to pay foreign depositers does little good.

If a person puts their money into a foreign bank expecting huge returns and that bank goes bust, why should the citizens of the foreign country have to pony up. The citizens aren't the ones who got the money.

[radhika]

5. So why didn't the US do this too?

Paulson gives Congress 3 days to 'save the world' and they fold. Upshot is broke, in-debt, unemployed US citizens channel funds to mop u after billionaire bankers and their international counterparties. If the US had a a similar referendum, the bailout would have been defeated soundly. (Apparently the phone calls to Congress were 90% opposed).