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Official: David Beckham to join AC Milan

Milan vice president Adriano Galliani has confirmed that LA Galaxy and England star David Beckham will join the club in January... more

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Charitable Gifts Increase Despite Credit Crisis: Yahoo! Finance

The increased giving, which comes as turmoil on Wall Street has cut contributions to nonprofits nationwide, demonstrates one of... more

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Iceland's Vanishing $5.4B Loan

Now you see it, now you don't: Russia's $5.4 billion loan to the Icelandic central bank went from being a done deal in the morning to a topic of "negotiation" in the afternoon on Tuesday.

The Icelandic central bank said Tuesday afternoon that Iceland and Russia had "decided to start" negotiations on financial issues in the next few days, a far cry from that morning's detailed announcement of a 4 billion-euro ($5.4 billion) loan approved at the very top by prime minister Vladimir Putin. (See "A Bank Falls Through Iceland's Cracks.")

A spokesman for the Icelandic central bank could not explain exactly why the announcement had changed so dramatically, but one banking source based in Iceland told Forbes.com that the central bank had quite simply "jumped the gun." He said that the detailed morning announcement had so upset the Russian ambassador to Iceland, Victor I. Tatarintsev, that he had called Icelandic premier Geir Haarde directly to clear up the matter.

Where that leaves the loan is not clear: The central bank's spokesman said that an Icelandic delegation would travel to Moscow to "finalize" the financial situation. He refused to confirm or deny the reported phone conversation between Tatarintsev and Haarde.

This incident may prove central in highlighting the political stakes at the heart of Iceland's economic crisis. Despite Iceland's status as a member of the pro-Western North Atlantic Treaty Organization, and as an initial supporter of the war in Iraq, it has found itself appealing to Eastern countries like Russia--and, reportedly, China--in a desperate bid for cash.

The Icelandic central bank said Tuesday morning that the Russian loan was needed to help bolster its foreign exchange reserves, which have dwindled to around 1.6 billion euros ($2.2 billion). The central bank also said it would peg its plunging currency at a level of 131 kroner to the euro, or a trade-weighted index of 175, in the inter-bank market.

The Icelandic government seized one of its biggest banks, Landsbanki, on Tuesday, after agreeing to guarantee all banking deposits in the country. This is the second effective nationalization in the space of a week in Iceland, and marks a dismal end to the past decade's international growth spurt for Icelandic banks.Now you see it, now you don't: Russia's $5.4 billion loan to the Icelandic central bank went from being a done deal in... more