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I just read an analysis from bond rating agency Standard & Poor’s about how Japan dealt with its banking crisis in the early 1990s. From 1994 to 2003, 180 Japanese banks failed. Total cost of the credit losses: $950 billion.
There the government took small incremental steps. There was strong opposition to bank bailouts and a series of administrations that failed to act.
The Japanese real estate bubble burst in 1992. It wasn’t until 1998 that the government began investing in the banks through subordinated debt. The government kept weak banks alive longer than they should have through depostion protection. Eventually the government began purchasing non-perfomring loans. The shortages of capital lasted until the early 2000s though.
Japanese industrial companies also had problems with excess capacity and a shortage of funding. In 2003 the government established an Industrial Revitalizaiton Corp. of Japan to provide capital. One of the lessons learned from Japan, according to S&P, is that it’s also vital for a country to protect big industrial corporations, such as the automakers.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.