From the conclusions of the Parliamentary committees report:
“The Parliamentary committee believes that the management and main owners of the financial institution carry the greatest responsibility for the collapse of the banking system. It is clear that banking in Iceland was characterized to a considerable extent by bad business habits and disrespect for the law and regulations. This was apparent in the way the owners and management behaved towards regulatory agencies and government.
Owners and management to blame: Landsbanki Íslands. Photo: Páll Stefánsson/Iceland Review
The Parliamentary committee points out, that financial institutions are not like any ordinary business. Society must be able to trust the management and owners for the mony of the general public. Internationally it is stressed that owners and management not only have the necessary knowledge on the business, but also strong judgment and known for their honesty. The reason is not least the temptations that are present in financial institutions, because of easy access to money. This is the so-called temptation problem that owners and management of Icelandic financial institutions do not seem to have handled.
It is clear from the report of the Research committee [which issued its report in April] that many features of the mechanism of the banks lead to considerable loss for the public and shareholders. This includes currency risk that was moved from the banks t customers and transferred to loan-risk. It is also to be criticized that the banks produced considerable demand for their own stock and hence created misleading information on demand. The Parliamentary committee strongly condemns the abuse of money market funds.
In the committee’s judgment management and owners of Icelandic financial institutions lacked feeling for both moral and communal responsibility. Examples of this were the decision of the management of Landsbanki to open a branch in Holland (Icesave), wide ranging cross-ownership, transaction of financial assets of the largest shareholders and loans to the same, loans to employees and others for the purchase of shares in the banks and sidestepping the law.”
Translations by icelandreview.com.
