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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (28748)	4/7/2010 11:24:05 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 103300

Maybe I missed it... but I just read that article and I DON'T SEE where it says that deposit accounts were sold 'without' Deposit Insurance (as you just said). What it appears to say is that AFTER the financial crash happened the Icelandic government told it's OWN CITIZENS that it would make good on the deposits that they had lost, but it would not make good on foreigner's losses. (A point I think we've discussed previously.) It also says that WHEN the Icelandic government made that announcement countries ALL AROUND THE WORLD immediately froze Icelandic government deposits that were in their own banking systems --- and then used that money to pay off the losses their own citizens had suffered when their guarantees of deposit insurance were reneged on. (So it seems like Iceland is paying one way or another... at least if those frozen government accounts are BIG ENOUGH to cover the private losses. Maybe they aren't....) The article also seems to say that Icesave was a BRANCH of the central bank: The situation was made worse by the fact that Icesave was operating as a branch of Landsbanki, rather than as a legally independent subsidiary. As such, it was completely dependent on the Central Bank of Iceland for emergency loans of liquidity.... Seems pretty complicated though.... Seems like the guarantees on SOME foreigner's deposit losses are being recognized and paid-off by Iceland now, (while others are not): Outside Iceland Over £840 million in cash from more than 100 UK local authorities was invested in Icelandic banks.[146] Representatives from each council are meeting to try to persuade the Treasury to secure the money in the same way that customers' money in Icesave was fully guaranteed.[146] Of all the local authorities, Kent County Council has the most money invested in Icelandic banks, currently £50 million.[146] Transport for London, the organisation that operates and coordinates transport services within London, also has a large investment at £40 million.[146] Local authorities were working under government advice to invest their money across many national and international banks as a way of spreading risk. Other UK organisations said to have invested heavily include police services and fire authorities,[146] and even the Audit Commission.[147] It is hoped that about one-third of the deposited money will be available fairly rapidly, corresponding to the liquid assets of the UK subsidiaries: liquidation of other assets, such as loans and offices, will take longer.[148] In an emergency sitting of Tynwald on 9 October, the Isle of Man government raised compensation from 75% of the first £15,000 per depositor to 100% of £50,000 per depositor.[149] The Chief Minister of the Isle of Man, Tony Brown, confirmed that Kaupthing had guaranteed the operations and liabilities of its Manx subsidiary in September 2007, and that the Manx government was pressing Iceland to honour this guarantee.[150] Depositors with Landsbanki on Guernsey found themselves without any depositor protection.[151] On 11 October, an agreement was reached between the Icelandic and Dutch governments on the savings of about 120,000 Dutch citizens. The Icelandic government will cover the first €20,887 on savings accounts of Dutch citizens held by Landsbanki subsidiary Icesave, using money lent by the Dutch government. The total value of Icesave deposits in the Netherlands is €1.7 billion.[152] At the same time, Iceland and Britain reached an agreement on the general contours of a solution: Icesave deposits in the UK total £4 billion (€5 billion) in 300,000 accounts.[153] The figure of €20,887 is the amount covered by the Icelandic Depositors' and Investors' Guarantee Fund (DIGF; Tryggingarsjóður in Icelandic):[154] however, the DIGF had equity of only 8.3 billion krónur at the end of 2007,[155] €90 million at the exchange rates of the time and far from sufficient to cover the Dutch and British claims. The cost of deposit insurance in the UK is not completely clear as of November 2008. The Financial Services Compensation Scheme (FSCS) paid around £3 billion to transfer deposits from Heritable Bank and Kaupthing Singer & Friedlander to ING Direct, while the UK Treasury paid an additional £600 million to guarantee retail deposits that were higher than the FSCS limit.[156] The Treasury also paid out £800 million to guarantee Icesave deposits that were higher than the limit. A loan of £2.2 billion to the Icelandic government is expected to cover the claims against the Icelandic DIGF relating to Icesave, while the exposure of the UK FSCS is expected to be £1–2 billion..... Suppose we would have to slog through the source material (@ footnote 156, or 46) to find out EXACTLY WHAT the "FSCS deposit insurance limit" was. But, it seems pretty clear that there was "deposit insurance" on the deposit accounts, (but Iceland was way, way LAX when they deeply UNDER CAPITALIZED the insurance.)