A number of key events are etched on the memories of treasury managers in local government. The collapse of BCCI in 1991 and the Hammersmith and Fulham swaps case in 1992 (relating to activity during the mid-1980s) are two of the biggest. The question is, will last year’s collapse of the Icelandic banks ultimately have equally profound consequences for local authorities? There is no doubt that there has been a massive media and public scrutiny reaction to the news that councils had £1bn invested in Icelandic banks – funds which are now at risk.
