Iceland, one of the nations who suffered the most from 2008 financial crisis, has sentenced 26 corrupted bankers to combined 74 years of prison. Many newspaper agencies pointed out the irony in the story where Iceland is focusing on prosecuting the CEOs rather than low level traders. Many people still criticized the governments of the Western countries have failed to address the core problems of the financial system- the bankers who devastated the world’s financial market in 2008 barely faced its consequences.
In two separate rulings last week, the Supreme Court of Iceland and Reykjavik District Court sentenced six top managers of two national banks for crimes committed in the lead up to the banking sector’s collapse, bringing the total number of people who have faced the music for their roles in the crash to 26, according to the Iceland Magazine.
In 2001, the financial sector in Iceland was deregulated. This change in policy helped bankers to manipulate the markets more easily. As a result, an accumulation of foreign debts strained Iceland’s overly-leveraged economy, thus it collapsed under a worldwide credit squeeze.
For the past weeks, the Supreme Court of Iceland and the Reykjavík District Court sentenced three top managers of Landsbankinn and two top managers of Kaupþing, along with one prominent investor, to prison for crimes committed in the lead-up to the financial collapse of 2008, as reported by the Iceland Magazine.
While in the United States, people were dissatisfied that their tax money was used to bail out the failing American banks. Many of the executives of the bailed out banks end up receiving large bonuses in the end. According to New York’s attorney general, one of the largest recipients of government bailout money, Citigroup, gave its executives US$5.33 billion for bonuses in 2008.
Iceland’s economy has recovered since its economic collapsed in 2008. The International Monetary Fund said on October 9 that Iceland has repaid US$332 million ahead of its schedule. “We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing in Europe,” said Iceland’s President Olafur Ragnar Grimsson.