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Pastimes : Ask Mohan about the Market
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To: geewiz who wrote (12381)12/26/1997 10:21:00 AM
From: Defrocked  Read Replies (1) of 18056
 
NYTimes Dec.25 Sec.C3 "Japan Postpones Deadline for Sanctions
on Banks"

"The Japanese Finance Ministry, concerned that a decline in bank
lending will lead to more business failures, today postponed the
imposition of penalities on banks that do not meet its standard
of financial soundness. The lack of bank credits 'is more serious
than expected',said Finance Minister Hiroshi Mitsuzuka. The ministry
postponed for one year sanctions that were to have taken effect on
April 1 against banks whose capital as a proportion of assets do
not reach the minimum domestic standard of 4 percent. In doing so,
the ministry retreated from a policy of allowing market forces to
weed out weaker banks."
<snip>

FM Mitsuzuka declared today that Japan's financial crisis was
over and investors acted to push the Nikkei down 3.3%.(Source:
Bloomberg Dec. 26 7:09EST)
<snip>

I believe the comic strip character,Pogo, had a great line for this:
"We have seen the enemy and they are us"<g>

More seriously, in the US, domestic banks get additional audit
scrutiny once the Cap/Asset ratio declines below 8 percent.
Below 6% warrants serious FDIC action occurs. Below 4% would be buyout
time. In stark contrast, many Japanese banks cannot apparantly
even achieve 4% with questionable accounting! Thus, the FM has
extended by another 15 months the workout period for these highly
leveraged and potentially insolvent financial institutions and
has the further gumption to tell the market the situation has now
been resolved. Confidence inspiring isn't it?<g>FWIW.
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