Real Estate Law and Icelandic Sagas

I posted this on the wonderful economics and finance blog Naked Capital, in response to articles arguing that -- due to the criminal behavior of the large American banks -- the title to private and commercial real estate is now so clouded that no one can be sure if they actually own what they think they own, and also to an article on the MF Global bankruptcy. MF Global was an investment firm that stole money from customers' accounts and (apparently) put the money in a large New York bank, from which (it appears) the customers cannot recover their money. This was not money that had been invested. This was money in cash accounts, like money in bank accounts.

If I am understanding the various links correctly, property law no longer functions in the US, at least in re real estate, and investors can no longer be sure they have an right to the money they have put at investment firms. I guess my next question is, who owns the money in my bank accounts?

There is a wonderful line in the Icelandic Njals saga, spoken by the saga hero Njal: “With laws shall our land be built up, but with lawlessness laid waste.”

The verb translated as “built up” means settle, inhabit or occupy and also means to let money out at interest. So the line could be a motto for real estate law or maybe for the Occupy movement. Though in the case of Occupy, a couple of words should be reversed, “With Occupation shall the land be made lawful.” We hope.

For what it’s worth, rich and powerful men broke apart the medieval Icelandic legal and government system, pushing the country into civil war. The Icelandic Republic collapsed and the Norwegian Crown took over. The Icelanders spent the next 600 years as a colony in poverty so severe that it almost extinguished the Icelandic people.

Njals saga was written in the 13th century, when the Republic ended amid civil war. The Icelanders knew what had destroyed their country. The tragedy of the Njals saga, considered to be the greatest of the sagas, was the breakdown on law.