Icelanders go to the polls this weekend to decide whether to pay the debts of a failed bank. Planet Money's David Kestenbaum is in Reykjavik, and he spoke with Renee Montagne.
For more: Read our post, "Should I Pay For Bankers' Mistakes?"
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RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. I'm Renee Montagne.
And the people of Iceland are still tangled up in one of the strangest stories of the financial crisis. Tomorrow they will be facing one of the strangest votes in the country's history. Here's the question they must decide: Should they pay what could amount to thousands of dollars per person to repair the damage done by some very rich bankers?
David Kestenbaum with our Planet Money team is in Reykjavik, Iceland and joined us to talk about it.
Good morning, David.
DAVID KESTENBAUM: Good morning, Renee.
MONTAGNE: Remind us of what happened in the first place. Why are the people of Iceland in this position?
KESTENBAUM: So Iceland for centuries, you know, you know it as a fishing place, but leading up to the financial crisis it had become a huge banking center. The banks actually grew much, much larger than the government. And a few years ago, they all failed.
This turned out to be not just a problem for Iceland. It was a problem for other countries also. In particular there were hundreds of thousands of people in the U.K. and the Netherlands who had deposited money in these banks and could not get that money out.
So what happened is the British and Dutch governments didn't want their people to panic. They stepped in and they basically gave those people their money back. The British and Dutch governments didn't want to be paying for this mess. At this point they've been able to recover a lot of the money from the failed banks. But it doesn't look like that is going to be enough.
And now, for one of the failed banks, the British and Dutch governments are trying to get the rest of the money from the people of Iceland. That's what this vote is about: Should the people of Iceland give them that money?
MONTAGNE: And just how much money are we talking about here?
KESTENBAUM: Well, the estimates range, but the largest number floating around is about $2 billion, which doesn't sound that big compared to some of the U.S. bank bailouts. But you have to remember, Iceland is a tiny country. The population is just a little bigger than Lexington, Kentucky.
So if the bill is that big, it's going to work out to $6,000 for every man, woman and child. And no one here is happy about the prospect of - you know, imagine taking out a pen and writing a check for $6,000 for yourself to someone else. But there are people who argue that for the sake of the country's credibility and the international community and their economic future, voting yes and writing that check is the right thing to do.
MONTAGNE: And what do the polls say it looks like people there in Iceland are going to do?
KESTENBAUM: The polls were leaning toward yes, but in recent days it swung the other way in the direction of no. I met with a carpenter yesterday, a guy who was 71 years old, who said he'd definitely voting no. His view is this was a private bank. He says it's not my fault. We are a tiny country. It's completely unfair for us to have to pay for this.
He joked - he said if the British and the Dutch don't want to deal with us, that's fine. He says, you know, we've got everything we need. We have fish. We have electricity. We have food.
I'm actually here in Iceland in part because our intern on Planet Money is from Iceland. He's back here to vote. And when we went to bed last night, he said he was still undecided. He had no idea where he was going to come down.
MONTAGNE: You know, I'm wondering why this ended up as a referendum, which is really quite democratic, but still, everyone gets to vote on whether they're going to pay back this debt instead of what you would expect to happen, which is the government decides it.
KESTENBAUM: Right. So originally the government did decide that - parliament decided yes, we should repay this money. But then there was just this little thing, which is normally a formality. And that is that the president has to sign it. And the president here is not like Barack Obama. He's really a figurehead. He usually stays out of politics.
But when this bill landed on his desk, he vetoed it. And when he vetoes it, what happens is that the question goes to the people, to a referendum. So now everyone gets to vote. And what you have now is an entire country trying to figure out what to do.
It's become this complete national obsession. There were TV specials on it on Monday night and Tuesday night, which then got replayed on Wednesday. And last night there was a big debate. And so you have at kitchen tables all around the country everyone trying to figure out, are we going to basically write checks to people we don't even know in other countries all because of these failed banks?
MONTAGNE: David Kestenbaum speaking to us from Reykjavik, Iceland. He's with NPR's Planet Money team.
Thanks for joining us, David.
KESTENBAUM: You're welcome. Transcript provided by NPR, Copyright NPR.