It was the day the schadenfreude stopped. Like most people I know, I spent much of September chortling: the financial crisis was just delicious. There was the humiliation of the masters of the universe to savour, as well as the black comedy of Hank Paulson's blundering attempts to launch a lifeboat in the US. The bewilderment of the financial journalists, usually the most self-regarding of the commentariat, was a joy too, as was Labour's rush to restore Clause 4 in order to help out the capitalist system. All the fun of a meltdown—but on Tuesday 10th October, I became a victim.
I was one of the last people to put money into Icesave. Not a lot—£20,000, exactly what Isaac Newton lost in the South Sea bubble, (though this was worth rather more then). But we freelance journalists are not known for the size of our pension plans. The money had been languishing in a NatWest offshore account, dating from when we lived in Thailand. I realised in mid September that the account was not covered by Britain's Financial Services Compensation Scheme (FSCS), which now guaranteed individual savers' deposits up to £50,000. RBS, NatWest's parent, didn't look shaky at that point, but after the fall of HBOS and Lehman Brothers, it had become clear that no bank was entirely safe.
So I opened two internet accounts—one for instant access, the other with a view to the longer term—and split our family savings. Choosing Icesave was just small investor greed: I used a financial website and found who would offer me the best rate for a one year bond. I didn't even bother calculating that the 7.06 per cent rate would net us only £90 or so more in the year than if I'd put the money somewhere less exotic—like RBS. And so by Wednesday morning, with the collapse of Icesave's parent, Landsbanki, I was an embarrassed man, suffering, as the Times told me that day, from "money sickness syndrome: stress arising from poor understanding or poor control of personal finances."
The silliest part is that the money had only left my account the previous Friday—by which time one Icelandic bank was nationalised and there were clear doubts over Iceland's solvency. My hand was over the telephone, poised to call NatWest to stop the transfer—then I thought, wait, why should I be a sheep? Panicked withdrawals are one of the things that got us into this mess in the first place. I don't want anyone to say I was a guilty party in the Great Crash of 2008. Besides, Icesave depositors were guaranteed by the FSCS.
The worst moment of the week was when I found myself cursing John Humphrys on the kitchen radio: he was so busy bullying Alistair Darling over the "rescue plan" that I couldn't hear whether the chancellor had agreed to pick up all Icesave's liabilities to private depositors. Because of course by then we'd found out that the deal with the FSCS was that Iceland itself would guarantee the first €20,000 of deposits—and the Icelandic government had now admitted it wasn't able to guarantee anything.
But Darling did save me. He seized the parent bank's British assets and announced that Britain would look after all the private deposits up to the £50,000 limit. We may turn out to be the lucky ones—our bank went down early. If more go under, Darling may not be able to be so generous. Now I am waiting for the FSCS to send me a cheque. There's a spot ready for it under the mattress.
