While the U.S. government famously bailed out the banks that created the 2008 financial crisis, the Icelandic government took them over and continues to prosecute the bankers who helped cause the collapse.
REYKJAVIK, Iceland — While the number of cases against alleged corporate criminals fell to record-lows in the United States, Iceland is continuing to prosecute the bankers who caused the 2008 global financial crisis, with dozens already landing prison sentences.
So far, Iceland has sentenced 26 bankers to a combined 74 years in prison. The latest to face charges are five top executives from two of the country’s largest banks, Kaupþing and Landsbanki, which the Icelandic government took control of in the wake of the 2008 financial collapse.
These charges stand in sharp contrast to the situation in the U.S., where fewer corporate executives than ever are facing criminal prosecution. A report from researchers at Syracuse University revealed that during the first nine months of the 2015 fiscal year, federal prosecution for white collar crime fell to a 20-year low.
Iceland has reserved its harshest sentences for the top managers at the offending banks, according to an Oct. 14 report from Iceland Magazine:
“The former top bosses of Kaupþing have received the longest sentences to date. Hreiðar Már Sigurðsson, the former CEO of failed bank Kaupþing and Magnús Guðmundsson, the CEO of Kaupþing Luxembourg, top the list, having been sentenced to a combined six years in prison for extensive market manipulation, embezzlement and breach of fiduciary duties.”
Although Icelandic law caps combined prison sentences for financial crimes at a six-year maximum, there is an exception for repeated and systematic offenses, and Magnús and Hreiðar Már are both facing future trials that may extend their prison terms. Other bankers or financial industry executives are also awaiting trial:
“In addition to the bosses of the three largest banks several other financiers and bankers have been sentenced by the Supreme Court or the Reykjavík District Court for crimes in the lead up to the 2008 financial crisis. The most prominent of these was Baldur Guðlaugsson, the former permanent secretary of Ministry of Finance, who was sentenced to two years in prison for insider trading in 2012.”
According to Dan Wright, a journalist who covers corporate power and inequality for the investigative press organization Shadowproof, the U.S. Justice Department vowed in September to change its policy on corporate executives that commit crimes, writing in a memo that the DOJ would “fully leverage its resources to identify culpable individuals at all levels in corporate cases.”
Despite these assurances, Wright noted that the DOJ has still failed to prosecute any executives for recent corporate crimes, such as a scheme by Boeing executives to defraud the U.S. Air Force or the decision by General Motors officials to deliberately mislead the public and government regulators about a faulty ignition switch that killed over 120 people.
On tour for his book “The Courage To Act,” Ben Bernanke, chairman of the Federal Reserve during the financial crisis, told USA Today: “[I]t would have been my preference to have more investigations of individual actions because obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm.”
But as Wright reported on Oct. 6:
“All the major Wall Street financial firms nicknamed Too Big To Fail banks – Bank of America, JPMorgan, Citigroup, Wells Fargo, Goldman Sachs – have paid out settlements for illegal conduct in the mortgage security market that caused the 2008 financial crisis. No individual executives have gone to jail or even faced prosecution for that conduct.”