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The secret heroes of Iceland’s banking resolution

Part one: Iceland’s banking crisis still fascinates and appals in equal measure. The first steps towards resolution were led by a group of unheralded officials and advisers for whom the events of late 2008 and 2009 were like sending out half a football team to play a competitive match. Ten years after it happened, this is their story.


Illustration: David Manion

For the Reykjavik-based lawyer, Johannes Karl Sveinsson, the story of Iceland’s spectacular collapse began on Saturday October 4, 2008. He had spent the evening at the National Theatre with his wife and family, watching a lively musical set in Reykjavik in the 1980s, entitled ‘Love is disco, life is punk’. 

While he does not recall much about the production itself, Sveinsson vividly remembers the profusion of missed call notifications that pinged on his mobile after the curtain had fallen. Most of those calls had been from Jonas Jonsson, head of Iceland’s horribly under-resourced financial industry regulator, the FME, which Sveinsson had counselled in the past. That weekend Jonsson was in desperate need of help. 

Perhaps it is unsurprising that Sveinsson does not recall any details of the show. After all, late that Saturday night he had other things to worry about, foremost among them was the possibility – fast becoming a probability – of the imminent and catastrophic collapse of his country’s economy.

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