Iceland says defunct banks could be made bankrupt unless creditors take haircut
Source: Reuters
STOCKHOLM, May 27 (Reuters) - Iceland's defunct banks could be put into bankruptcy if creditors do not agree to a haircut on debts owed by Kaupthing, Glitnir and Landsbanki, which collapsed in 2008 owing more than $75 billion, the finance minister warned on Tuesday.
Iceland slapped on capital controls after the financial meltdown, hampering much needed investment, but these cannot be removed until a deal to wind up the left-overs of the old banks - around 2,500 billion krona ($22 billion) in cash, shares and bonds - is reached with creditors.
"It should be obvious to everyone that winding up procedures can't take forever," Finance Minister Bjarni Benediktsson said in a telephone interview. "If they are unsuccessful, then we have to take it to the next step. That (bankruptcy) may well happen. One should not exclude that possibility if the winding up procedures that started in 2009 don't show any success."
Bankruptcy would mean a fire-sale of assets and probably much lower recoveries for creditors, who have claims against the old banks totalling 7,530 billion Iceland krona ($66 billion), dwarfing Iceland's 2013 GDP of 1,786 billion krona.
Read more: http://www.reuters.com/article/2014/05/27/iceland-banks-idUSL6N0OD4YM20140527
SoapBox
(18,791 posts)And other various Bankster types.
AtheistCrusader
(33,982 posts)And how. They threw motherfuckers in jail, instead of handing them taxpayer money to cover their speculative losses.
bvar22
(39,909 posts)they LOST,
and should pay their debts without whining.
Unlike in the USA, where they are Bailed Out.
God Forbid the RICH should pay their gambling losses.
THAT is for the SUCKERS on Main Street.
[font size=3]Paulson with Co-Conspirators
[font size=3]Now THIS is Bi-Partisanship!
Hahahahahahaha, SUCKERS!!
cstanleytech
(26,293 posts)but I do disagree with the government giving the people in charge at the banks a free pass for their actions as all that does is encourage people to do it again.
bvar22
(39,909 posts)...for their FAILURES?
I certainly do.
You have no problem with Bailing out the "Too Big to Fails",
and turning their back on Main Street?
I certainly do.
"They" claim that the Saved the Economy, and THAT is debatable.
What is NOT debatable is that the Bi-Partisan Majority that voted to Bail Out Wall Street saved the portfolios of the Investor Class (including themselves) from a negative Quarterly Statement.
I have a problem with that too.
JoeyT
(6,785 posts)for every million dollars we spend to bail them out, one of the higher ups gets ten years in prison. And it should've started at the CEO level and worked its way down.
FrodosPet
(5,169 posts)No trials or anything?
You know, those complicated proceedings where the prosecution, acting on behalf of the government, has to present charges on specific violations of the criminal law of the appropriate jurisdiction. This is in the form of physical evidence and the testimony of witnesses.
The defense is then allowed to cross examine the prosecution's witnesses and present evidence of their own to cast doubt about the accuracy and or applicability of the charges.
In order to convict, the jury must unanimously agree that the evidence presented proves, beyond a reasonable doubt, that the person committed the specific offenses detailed. They cannot find him guilty of "he probably did something illegal".
Should some more bankers go to jail for something? Probably. But the reality is, you would need some amazing investigative and prosecutorial skills to go through a lot of these cases. And then you have to prove that what was done was actually against an existing law, and not just the fault of negligence, excessive optimism, or misunderstandings.
JoeyT
(6,785 posts)I think they should've been charged and tried, of course. I'm not in favor of extra-judicial punishment of any form, no matter how much I dislike the person/group. It sets a terrible precedent.
cstanleytech
(26,293 posts)FrodosPet
(5,169 posts)Money and stuff should be given to people who need money and stuff.
If someone expects to be repaid, then they are no better than those other bankster types.
JDPriestly
(57,936 posts)geek tragedy
(68,868 posts)Hint: it won't be middle class workers bidding on those assets
BrotherIvan
(9,126 posts)The whole economy will collapse if creditors don't get 100 cents on the dollar! How could they not know this???
Uncle Joe
(58,364 posts)Thanks for the thread, Bosonic.
WillyT
(72,631 posts)Munificence
(493 posts)near you.
I don't see how we can avoid this in our future here in the United States.
Individuals with money in the bank are in essence providing a non-secured loan to the banks when they deposit their money in there.
Some will say "What about FDIC"...yeah right they will guarantee up to a certain amount but there is no stipulation in a time period of paying you back if ever.
Next round of "Bail-outs" will be "Bail-ins". You are investing in that bank by having money in there and will be given a haircut at some point if needed.
NutmegYankee
(16,199 posts)The government will seize the bank on a Friday and have the branchs open for depositors to access accounts by Monday. It's happened before to my family.
Munificence
(493 posts)referring to if we need bail-outs again on a major scale like we have been doing for the past 5 years....I am talking nation wide if there are "bail-ins" it will be big enough where nearly all banks will do it. Can't say that the FDIC will be able to back all of it or not. You can take that risk however if you choose.
Sure they work now, but if a major problem comes up in the future the next round of bail-outs with be "bail-ins" and investors in their non-secured investments will fund the bail-ins.
Please remember again that when you invest in a bank by opening a checking account or savings account you are giving them a non secured loan and you are getting maybe a whooping 1% interest.
NutmegYankee
(16,199 posts)Up to the limit, you would get your money with FDIC. The treasury would borrow money if needed. After that, it is the prime creditor and would get the money back before non-protected deposits. .
Munificence
(493 posts)my point?
Point is that if we require another "bail-out" of the banks that it will be in the form of "bail-ins" where the banks take say 10% of everyone's account value and use that for the "bail-out". See "Cyprus" as an example.
Point is that you by having money in the bank are providing them with a non-secured loan.
I never keep over $15-$25k in a bank.
NutmegYankee
(16,199 posts)Cyprus took a haircut for accounts above a certain threshold. In the US, we have FDIC up to a certain threshold. Accounts below that are 100% safe.
Cyprus was getting a EU bailout. We control our own currency and can borrow the money or inflate our way out of it.
dipsydoodle
(42,239 posts)Keep up the good work on wishing them harm.
The main effect will be on local authority workers.