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Strategies & Market Trends : John Pitera's Market Laboratory

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To: macavity who wrote (5668)	2/19/2002 9:31:33 PM
From: t4texas	Read Replies (2) of 33421

bank bailout like us banks in late 80s i would like to make a simplifying assumption that allows one to try to ignore some japanese culture problems for a moment (i understand that is too simple). i will try to make this short. i am no expert on the us bank and s&l bailout back in the late 80s/early 90s, but i do think i understand it conceptually. essentially the regulators in charge took insolvent banks and figured out which loans were performing/non-performing/marginal. they took the non-performing loans in the resolution trust (or whatever it was called) for action over time. they took the bank and the performing/marginal loans and got some rich guys to pump some money (pennies on the dollar) into the newly solvent bank with some management types who had a good chance of running a bank, and changed the name of the bank. voila, they had a solvent bank, and the resolution trust corp figured out how to dispose of the stuff in the non-performing category. over time lots of these newly solvent banks consolidated. assuming my conceptual understanding is not completely full of crap, why can't japan try something like this? quote.bloomberg.com

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