Word: bankses
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In 1998 the beginnings of a large-scale bailout program were finally put in place. Over the next several years, the Japanese government spent almost 47 trillion yen - or about $470 billion at current exchange rates - not only buying banks' bad assets but also recapitalizing them. Two large banks were...
The U.S. situation is somewhat different - delay is not an option. Accounting standards require financial institutions to routinely write down the value of assets to reflect their actual value. As a result, U.S. banks have booked massive losses, and the government has been forced to aggressively engineer ad hoc bailouts...
But based on their experience, Japanese analysts believe that actions to date have been insufficient. They say that in addition to the U.S. Treasury Department's plan to spend $700 billion buying bad assets from banks, the government also needs to recapitalize banks using taxpayer money. Only then will confidence...
Other Asian governments faced challenges similar to Japan's during the Asian financial crisis of 1997-98. In South Korea, for example, the government bought bad loans from banks and also injected government money into their balance sheets. Several banks were nationalized. Governments across the region also shut down financial...
Lessons from the 1997-98 Asian financial crisis come with caveats, since the conditions were markedly different. The crisis was contained to a relatively small number of countries - mainly Korea, Indonesia, Malaysia and Thailand - in which banks and businesses were unable to pay off debts owed to the outside world...