The United States has collected tens of billions of dollars in the wake of the 2007 –2008 economic meltdown. Bank of America alone paid over $20 billion, much of that last year in a landmark settlement involving $10 billion in cash and nearly $7 billion more in relief monies. 

How many executives from Bank of America went to prison? None! Wells Fargo? Chase? Citi? Ocwen? None! Compare this to tiny Iceland, which suffered just as much from the entire global banking mess as did the United States. In Iceland, many senior bank officers are headed to prison.

Reuters reports that Iceland’s Supreme Court upheld the convictions of four senior executives of one of Iceland’s largest banks, Kaupthing Bank. The four included the bank’s former CEO and chairman. Can you imagine the headlines in the United States if Brian Moynihan, CEO of Bank of America, was featured on the evening news in handcuffs and an orange jumpsuit?

Lest anyone think the four men got off easily, their sentences ranged from four to five and a half years.

The four executives from Kaupthing bank weren’t the only ones convicted. The CEO’s of two of Iceland’s other big banks, Glitnir and Landsbanki, were also convicted for their roles in the meltdown.

In a country of less than one half million people, Iceland managed to convict the chief executives of all three major banks. How did they succeed?

According to Reuters, the government tapped a 50 year old policeman from a small fishing village to be a special prosecutor. In an interview with the news service, special prosecutor Olafur Hauksson claimed that no individual was too big to prosecute. "It is dangerous that someone is too big to investigate - it gives a sense there is a safe haven," he said.

The Icelandic response to bank fraud has been much different than in the United States. Many more bank executives have gone to prison than in the United States. Why?

First, Iceland had the political will to prosecute and punish bankers. Their parliament made it easier for a special prosecutor to investigate and prosecute wrongdoers. Here, Congress has given prosecutors powerful laws to fine offenders. FIRREA, short for the Financial Institutions Reform Recovery and Enforcement Act, relaxes the burden of proof in bank fraud cases, pays whistleblowers up to $1.6 million and gives prosecutors a long 10 year statute of limitations. It doesn’t empower prosecutors to imprison offenders, however.

The laws here are also far more complex. While not taking anything away from Olafur Hauksson’s efforts, we don’t think a cop from a remote fishing village in the United States could prevail against armies of lawyers paid for by the banks.

While we would like to see more criminal prosecutions for bank fraud, something that incoming Attorney General Loretta Lynch has hinted at, we do believe the government’s efforts at punishing big banks with heavy fines is finally working.

Often relying on the federal False Claims Act and whistleblowers, the government has collected billions for taxpayers from the big banks and Wall Street. While some say these fines are nothing more than a cost of doing business, bank boards and shareholders are beginning to speak up and force banks to behave.

What’s next? We will soon have a new attorney general and some policy changes are inevitable. Assuming Ms. Lynch is confirmed, whistleblowers should continue to do well. For the foreseeable future, we believe insiders with original source knowledge of fraud within a bank or affecting a bank will continue to be eligible for significant cash awards and may also be eligible for anti-retaliation protections.

_{Note: Brian Mahany and Mahany & Ertl represented one of the three whistleblowers in that case.}