Former Prime Minister of Iceland on trial over economic crisis

Geir Haarde in court on charge of gross negligence1
Daylife/Reuters Pictures used by permission

Iceland began the trial Monday of former prime minister Geir Haarde for failing to prevent a 2008 financial crash, thought to be the only prosecution in the world of a political leader over the crisis.

Iceland’s top three banks all collapsed in late 2008 after years of debt-fuelled expansion. The country of just 320,000 people was forced to borrow around $10 billion from the International Monetary Fund and other lenders.

Parliament voted in 2010 to prosecute Haarde over the crisis at a special court of impeachment set up in 1905, which has never been used before. He has denied the charges. “None of us realized at the time that there was something fishy within the banking system itself, as now appears to have been the case,” Haarde told the court in opening questioning from the special prosecutor investigating crimes linked to the crisis.

Many Icelanders blame a small and closely connected group of businessmen, bankers and politicians for the crisis.

Haarde is charged with gross negligence for failing to take proper measures to prepare for an impending financial crash.

He is also accused of failing to rein in banks which grew their balance sheets to around nine times the size of the island’s economy in the years preceding the crisis…

Iceland’s biggest banks were all taken over by the state in late 2008 after the credit crunch provoked by the fall of Lehman Brothers froze their access to funds…

The economy has started to recover from the crisis, having borrowed on the international bond markets last year and getting its investment grade back from Fitch in February.

Bravo. Now, can we stealthily suggest to George W. Bush and Dick Cheney they should consider taking a trip to Iceland, say, for salmon fishing? Har.

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