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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: pater tenebrarum who wrote (127498)10/4/2001 6:28:14 PM
From: NOW  Read Replies (1) of 436258
 
I think we're turning japanese ithink we're turning japanese, i really think so....
"Another lesson from U.S. experience (of the '80s) is the costs of poor incentives financial institutions face when confronted with struggling borrowers. A bank often does not want to force restructuring on a borrower, preferring to hide any losses by continuing to roll over loans. A bank's shareholders are not likely to demand action on problem loans, especially if the bank might become insolvent as a result. This set of poor incentives is especially true for a poorly capitalized bank. For these banks, a true resolution will result in a markdown of the value of the loan and a further decline in capitalization. To avoid regulatory scrutiny, poorly capitalized banks struggle to keep loans current, papering over the problem in the misplaced hope for a reversal of fortune." - Yomiuri Shimbun
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