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Hotly-Debated Report on Re-Privatization of Banks

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Hotly-Debated Report on Re-Privatization of Banks

Alþingi parliament

From Alþingi, the Icelandic parliament. Photo: Páll Kjartansson.

Progressive Party MP Vigdís Hauksdóttir, who chairs the Alþingi parliament’s Budget Committee, and Independence Party MP Guðlaugur Þór Þórðarson, the committee’s first deputy chair, presented a report on Monday criticizing the re-privatization of the banks.

Private banks were overtaken by the Icelandic state after the banking collapse in October 2008. The post-crisis government, the Social Democrat-Left-Green coalition, which took power in January 2009, had the banks privatized, or restored, again.

In the report, it is maintained that former Finance Minister Steingrímur J. Sigfússon of the Left-Green Movement, other officials, and experts had decided to hand two new banks over to the creditors of the collapsed banks in 2009, Nútíminn explains.

In doing so, the state treasury took a risk worth ISK 296 billion (USD 2.4 billion, EUR 2.1 billion) for the sake of appeasing the creditors, the report states.

It has not been revealed who is the author of the report. Vigdís and Guðlaugur paid ISK 90,000 (USD 787, EUR 700) out of their own pockets to have it made, as it was not an official Budget Committee project.

Guðlaugur told RÚV that tax payers were the ones who primarily financed the re-privatization of the banks. “Fortunately, the affair went well because the current government has done a good job,” he maintained, referencing the so-called stability tax imposed on the banks’ creditors.

Guðlaugur reasoned that cases like Icesave, Keflavík Savings Bank (SPKEF) and Dróma were poorly handled by the post-crisis government and that the report shows that the government went too soft on the creditors.

Vigdís and Guðlaugur discussed the report with the other members of the Budget Committee yesterday. “I’m going to propose that the report be made a parliamentary document and be given a case number in parliament,” Vígdís told mbl.is.

The opposition has harshly criticized the report’s content and work methods.

On Tuesday, Steingrímur said in an interview on Morgunútvarpið radio program on Rás 2 that there is nothing new in the report. “This is a mix of accusations and big words which have been put forth before and been upheld for several months.”

Steingrímur stated that the accusations have already been rebutted by the Financial Supervisory Authority and the Ministry of Finance. He added that the Constitutional and Supervisory Committee of Alþingi have also investigated the accusations and come to the opposite conclusion to that of the report.

Steingrímur elaborated that the committee had concluded there were no indications of treachery or deception during the restoration of the banks and that no laws had intentionally been circumvented. He maintained that the state treasury had earned ISK 140 billion in the process.

Steingrímur criticizes that neither he nor others who are named in the report were contacted while it was being prepared and that it was a private initiative, sidelining the Budget Committee. “In my opinion, it comes close to being an abuse of the Budget Committee’s name, because the committee’s minority never had anything to do with it.”

Steingrímur believes that Vigdís was dissatisfied with the Constitutional and Supervisory Committee’s conclusion and had therefore been determined to come to a different conclusion.

In an interview on RÚV’s news analysis program Kastljós on Monday, Vigdís said that the report is not intended as a condemnation of anyone, but rather meant to shed light on how the interests of creditors were prioritized over the interests of Icelanders.

In an email Vigdís mistakenly sent to Stundin journalist Jóhann Páll Jóhannsson, instead of to fellow Progressive Party MP and Budget Committee member Páll Jóhann Pálsson, she reveals that she was “scared shitless” that Steingrímur might see her report before it was made public and that paying for it herself was a “statement.”

Stundin posted the email yesterday. Vigdís responded by posting a screenshot of the email on her Facebook page, claiming there was nothing in it which could be “blown out of proportion.” She added that she finds it “interesting to see how different media cover the report.”

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