The decision was about foreign, mostly UK, banks who gave (they call it "invested") money to Icelandic trading desks. These money were denied to pay back taken from Icelandic citizens. Keeping local banks from default on domestic deposits in favor to "foreign investors" (speculators) and letting them to face loses is what the govt of Iceland did, which was a proper decision. Overconfident, high ranked idiots who put funds in an obvious ponzi scheme are those who shall bear the consequences.