Staring into the abyss (continued)...

"Here come comes the pain"
Snake Eyes (1998)

In the UK, the British government has defended the actions of local authorities which invested more than £840m with now-failed Icelandic banks. Iceland's largest bank, Kaupthing, became the third financial institution to be taken over by the country's government in the past week.
So far local authorities in England, Wales and Scotland have revealed that they have deposits worth £842.5m in total. The figure is £946.8m when investments by police authorities and Transport for London are added.
Already there is reports that London town halls face raising council taxes and cutting spending in the wake of the Icelandic banking crash.
In full: Councils facing losses

All this is reminiscent of the fall of Bank of Credit and Commerce International (BCCI), which collapsed in 1991. Back then, up to 30 local authorities in the UK lost around £82m after investing in BCCI on the basis of approval by the Bank of England.
According to reports, some local authorities were warned about the risk of investing in Icelandic banks by international credit ratings agencies earlier this year. In fact some some local government managers did act on these warnings and withdrew their funds. So why did other councils still continue to invest tax-payers money into Icelandic banks? Also, why didn't the British government follow up on warnings in July about Icelandic banks facing collapse?