Silent contemporary records: Access to the archive of the Special Investigation Commission in Iceland, 2010–2019

Einkur G. Gudmundsson

This chapter addresses the issues of access to the archive of The Special Investigation Commission (SIC). The SIC was commissioned by the Icelandic parliament to investigate the financial crisis and collapse of Iceland’s major banks in October 2008.' The commission worked from January 2009 and delivered its report to the parliament in April 2010 and transferred its archive to the National Archives of Iceland (NAI) in June that year. After the SIC had done their job, the commission was dissolved. The NAI then became responsible for the SIC archive. The author of this article was at that time responsible for e-archiving in the NAI and later as director general (2011-2019) had the overall responsibility for giving or denying access to the SIC archive.2

The background

To set the scene and put things into perspective, it is necessary to lay out some facts about Iceland and some information on the economic environment leading to the financial crisis in 2008 in Iceland and the collapse of the biggest banks.

A small nation on a large island

Iceland is an island in the North Atlantic Ocean. It is 103,000 km2 in size with a population of about 360,000 people, making it the most sparsely populated sovereign state in Europe.3 Iceland is the second-largest island in Europe after Great Britain, which in size is 209,000 km2 and has a population of about 64 million people. For further comparison, Denmark is 43,000 km2 with a population of 5.8 million (2020).4 Iceland has rich fishery grounds and a lot of geothermal energy. After World War II, Iceland gradually became a modern society with high living standards and high life expectancy.5 It is a state where democracy and equal rights are respected. In the Global Gender Gap Report 2020, it is stated that Iceland is ‘the most gender-equal country in the world for the 11 th time in a row.’6 Average annual wages in Iceland have been among the highest in the world (2017-2018).7

Big ambitions

The Icelandic nation is tiny as was its economy, which was to a high degree controlled by the government. In the late 1990s and early 2000s, the banking system was deregulated and privatized. ‘The banks passed into the hands of individuals with little experience in modern banking, which then proceeded to take advantage of ample capital in international markets to fuel a high degree of leverage and exponential growth.’8 The new bank owners had big ambitions to succeed on the international stage, capital was available to lend, but the bankers lacked experience and there was a lack of appropriate banking regulations in Iceland.9

In 2007 and 2008, there were troubling signs in the global economy. Following the bankruptcy of the American bank Lehman Brothers in September 2008, there was an international financial crisis, which hit the Icelandic economy extremely hard, harder than most other countries. The country’s three biggest banks, which were far too big, could no longer fund themselves when liquidity became scarce. The combined outstanding bonds of these banks when they collapsed amounted roughly to 35 billion euros.10

Facing national bankruptcy

To prevent a national bankruptcy and save the national economy, the Icelandic government took over the three biggest banks in early October 2008. This was done by passing a special law, often called the Emergency Act, which came into force on 7 October 2008.11 This act authorised the government to take specific measures when extreme circumstances rule the financial market.The act allowed the government to finance, take over financial companies or establish new ones.The aim was to prevent the bankruptcy of the banking system (and thereby saving the national economy), and rebuild trust of the public in the financial system.

Despite this, the crisis resulted in huge financial losses. The economic consequences were enormous for the country, businesses and its inhabitants in the weeks and months to come. Thousands of people lost their savings, and many got into debt. The Icelandic currency (krona) weakened against other currencies (a pound sterling (/} cost 44% more in Icelandic currency (krona) in the end of September 2008 than at the beginning of the year).This led to higher prices of imported goods and a rise in inflation. Unemployment increased. Salaries were reduced. Mortgages rose and many homeowners defaulted on their mortgages especially when the cost of loans based on foreign currency increased dramatically.12

 
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