RIFF – Revisiting the Crisis in Reykjavik, on Film

The Reykjavik International Film Festival (RIFF) – Iceland


Dir. Petur Einarsson, Iceland, 2016, 53 minutes

Iceland, a financial wreck in recent memory, seems to be on its way back from the brink toward recovery, carried there by tourism, if the Williamsburg-style hipster scene at my hotel during the Reykjavik International Film Festival was one indication among many.

Follow the Puffin

Follow the Puffin

There’s another thing. Strict currency controls ensure that you can’t take much of the local krona out of the country, which means that the money stays in local banks and doesn’t stream into yen or, God forbid, British pounds, as it did in such volume in 2008 that the island country over-leveraged itself by many times, and depositors panicked.

ransacked_poster_web-350x495The macro and micro sides of this crisis are the subject of a revelatory documentary at RIFF. Ransacked, by Petur Einarsson, revisits the crash of 2008 through the experience of a family led by Thorsteinn Theodorsson, a man who played by the rules, and lost – and then fought back.

Thorsteinn (Icelanders don’t have last names, but patronymics) worked with machines for most of his life. When he invested his savings a decade ago, the money went into foreign currencies which appreciated faster than the krona and put him deep in debt. That indebtedness spiraled out of control. We meet Thorsteinn when he’s in a hospital bed, suffering from injuries after crashing into a wall on his motorcycle – it’s an “accident” – ahem, the same way the crisis was — you’ll need to see the film to know about it. His case is one of many sad stories in this country of a bit more than 300 thousand people. Thorsteinn’s wounds are not healing as fast as those endured by the country’s bankers.

Petur Einarsson in Banking Mode

Petur Einarsson in Banking Mode

Yet the special dimension of Ransacked is that its director, Petur Einarsson, is a banker, or was one in the dark days. Petur, who has the visage of Georges Seurat, worked in banks before the crash, and worked after the crisis to reconstitute them from the ruins of his country’s economy, and from the hands of hedge funds.  He turned to independent filmmaking after he quit his job and his marriage failed. He survives today by renting out his apartment in Reykjavik on Airbnb.

Petur Einarsson Today

Petur Einarsson Today

I spoke to Petur Einarsson during the Reykjavik International Film Festival, where Ransacked made its world premiere.


David D’Arcy: Is your mother proud that her son was a banker?

Petur Einarsson: Yes, and she asked me if I was going to go back into banking. She’s just worried that making films is not a good way to make a living. She’s seen the film three times.

Q: To what extent is the same banking system in Iceland from the crisis still there?

A: They went bust – the three big banks – yet we still have the same banks today. We have partly the same people, the same structure, the same offices, the same system. The only difference is that they are just in Iceland. They’re not international, we’re not allowing that. But the fundamental problem of the system, which is a run on the bank in a time of crisis, is still there.  We still have banks which have a tendency to become too big. It doesn’t happen with any other business.  The size was really a problem.

The Wrong Ship of State

The Wrong Ship of State

Q: Is the real problem confidence or trust?

A: Once that confidence goes, which happened in 2008 all over the world, and in Iceland, then the taxpayers and the central banks have to bail them out and support the banks. That was not possible in Iceland.

Q: Why not?

A:  Because the banks were way too big and the central bank did not have the resources, which would have been 12 times GDP. So it wasn’t a decision not to bail out Iceland. It was just not possible

Q: You’re Icelandic?

A: I’m totally Icelandic, born on the National Day, June 17, but was three months old when I sailed on a ship to Copenhagen with my grandmother, because my father was a diplomat, so I was raised outside the country. He spoke French, so we were posted in French-speaking Europe. His last position was as the Icelandic ambassador to the United States in Washington.

Q: How did you become CEO of a bank?

A: I was CEO of a bank after the crisis only because I had experience in banking. And for this film, I’m more interested in the system than I am in individuals. Have you see the film Spotlight, about the Boston Globe? When the editor says that the newspaper’s not after three guys or twenty guys, but after the system, that’s what led to the revelation that the newspaper made.

Q: Spotlight was popular in Iceland?

A: Yes. We don’t have much of a Catholic church here, but we were shocked.

Q: Isn’t banking different, though, especially in a small country? It’s the abuse of someone who thinks that he’s entering into a fair contract with a trusted institution.

A: In the film, Thorsteinn says “For me, the bank manager was like the priest. I always trusted him.”

Q: Why did you select his story to tell? Was he your first choice?

A: I looked all over Iceland. I know all the lawyers who have been working on these cases. The best script writer in Hollywood could not have written the story of him and his daughter.

Q: How did you raise money for this? I can’t imagine that hedge funders would want to invest in it.

A: I sold my car. I put my apartment on Airbnb. I now live in one room. I had some savings that I used. And I got a grant from the Icelandic Film Institute. I get 20% of my costs back from the government.

Q: Normally we would think of Warner Brothers getting 20% back, not a filmmaker financing something autonomously. That’s an unexpected application of the rebate. What was your total budget?

A: About $250 thousand. We spent 4 or 5 months doing interviews – quite a long time. Editing was three months. I haven’t been paid anything.

Q: Back to the crisis. Why were you put in charge of a bank?

A: I had the credentials. I had been in charge of Islandsbanki, one of the main banks.

Q: What was your specialty there?

A: I was a corporate banker within the fishing industry. I was doing ship financing – first in Iceland, for the big ships in Iceland, then internationally.  I had a team of experts, and we were financing ships in Iceland, or in Chile or in Japan – all over the world. Very profitable.

Q: So these were secure loans.

A: Yes. Nothing lost.

Then I worked for an investment bank that merged with a commercial bank.

Q:  Was that legal?

A: Yes, and controversial. I had access to a lot of funding from deposits. What I did then was to mix investment banking with corporate lending. Basically, I and many others saw that, by making risky loans, we could make more on fees. That’s where I saw personally the risk of having big banks like this that take deposits and have access to a good rating because they are too big to fail, and investment banking, where you get fees, and I get a bonus. Mixing those two kinds of banks proved to be a big problem, and I was involved in that. But I left the bank before the crisis, and then, when they were looking for someone who was not in jail, they found me.

Q: Why did you leave the bank before the crisis.

A: I had migraines and stress. Sometimes I had to lock myself in a room with no lights. I could not cope with it. We had the house, the cars and the kids. I cried. My wife, who had never seen me cry before, said, “Now you’re crying because a bank goes bust,” and I said, “Sorry, yeah.” My whole world had fallen apart.

Q: What were you dong after the crisis?

A: Pure investment banking – no balance sheet, no lending. I started writing articles calling for a division between retail and investment banking. I made a speech in the HARPAD [new $400 million concert hall], with cartoons mocking casino banking. I was saying that I might be taking big risks, because I was an investment banker, but I wasn’t taking deposits. If I fail, it’s too bad for me. It’s not going to hurt the economy. I said that it was wrong for the big banks to do this with the people’s money. I said that really loud. The banks were not happy about that. So I quit the bank.

Q: But weren’t ordinary people also in favor of unleashing the banks so they could make money in any way possible?

A: Everyone was. It was a party.

Q: Do you think that Iceland has recovered from this economic crisis?

A: On the macro scale, yes – low inflation, high economic growth, low unemployment, strong currency – definitely. It has recovered, but the problem is distribution. Who has recovered, and how has this impacted differently on people?

Q: Could film and television be a strong sector of the Icelandic economy?

A: I would say it already is. It’s a growing sector. It’s the first time, with Trapped, that we’ve made an international TV series. (In The Oath, the film directed by and starring Baltasar Kormakur, I was the double for him riding a bike and swimming.)  The Oath is taking Icelandic film to the next level. I’m also excited about Baltasar’s plans for a “Cinema Village” for production in Reykjavik. I want to be part of that.

Q: Back to the crisis. Where’s the area of risk in the Icelandic economy today?

A: We have capital controls right now. We are locked in on the island. You cannot take Icelandic krona out of Iceland right now.

Q: I could, in my pocket, if I don’t spend all the money that I changed.

A: Icelanders can’t take out more than $2000 per trip. So if they remove those barriers, what do you think that people will do? They might take their money out, and say “Oh, I’d rather keep it in Switzerland or wherever.” What’s going to happen to the money then?

Q: What story did you want to tell about the crisis that had not been told before?

A: I’m talking about the consequences of the crisis. People are always talking about this sort of blame game, about who did what. I don’t think that’s very constructive. How’s that going to help us today?

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