Local and regional governments caught in credit crisis

HAARLEM – The list of municipalities, provinces and other governmental jurisdictions such as waterschappen, the diking and water management boards, that placed deposits with Iceland banks, is growing daily as embarrassed officials reveal that their jurisdiction also is among the victims caught in the current global credit crisis. Interestingly, the municipalities and the Water Boards each own a bank but regulations prohibit them from placing their funds beyond certain ceilings at one bank, hence the choice of Iceland and perhaps other troubled banks. Besides taking in deposits, the Iceland banks also place loans into the hundreds of millions in the Netherlands. The governmental jurisdictions are now banding together to seek the return of their deposits, which amount so far to about 220 million euros. An expert suggests that the group may be helped most by using quiet diplomacy.