Aren´t Banks also corporations?

Yes, but from a very different kind. This was the answer I provided to my friend.

They take one´s money and they use it to lend it to another person. They pay a low retribution for the funds they got and ask for a higher interest on what they lend.

Therefore, when a bank deepens into bankruptcy; its repercussions are wider than any other corporation. But that´s only the beginning; it is a fatal stabbing on the trust spirit on which the banking system roots its foundation, its survival.

Hence the critical point: Banking is not just another economical activity; it is a business activity which carries a heavy load of responsibilities, managing our most precious collective asset: Wealth.

In the last days, I have been reading some interesting articles on the New York Times and on Mainichi Daily News about what the world can learn about the experience of Japan dealing with its financial crisis.

In the current crisis, it supplied me with so much food for tough, so much data for brain digestion.

A better reflection on the measure Japanese officials had to take confirms that you got to do what you got to do and do it quickly. Is it about more money and faster?

The panacea of quasi-nano interest rates, fiscal stimulus and vain cash infusions will become a huge useless shot in the dark and a burden for our future.

Japan took too long to recognize there as a serious crisis, only in late November 1997, when of Sanyo Securities and Yamaichi Securities collapsed, they were able to overcome the denial phase.

One may very easily state how similar these situations were regarding the failures of Bear Stearns and Lehman Brothers.

In 1998, the Japanese Diet, passed the Financial Reconstruction Law, providing around 515 billion USD to acquire Japanese financial institutions in danger, as well as the Financial System Revitalization Law which created the Financial System Agency, an independent regulator

But only in 2003 did the government finally started the proper way for a recovery, forcing major banks to submit to full audits and declare bad debts. Two trillion yen were spent, nationalizing key banks, such as LTCB - Long-Term Credit Bank of Japan, one of the major banks, whipping out its shareholders and allowing weaker banks to fail.


As a matter of fact, Japan's financial system only started to recover in late 2002 when Prime-Minister Junichiro Koizumi ordered an uncompromised and full extended audit on Japan´s main Banks, 6 years after the beginning of the crisis
This was the Takenaka Plan and it finally disclosed the full extent of bad loans in Japanese Banks.

Mr. Heizō Takenaka,minister of Finance, stood firm to his principles:
1 - "Don't cover up. Don't distort principles. Follow the rules."
2 - "I told the banks clearly, 'I am in a position to supervise you and I am not open to negotiation."
It took three more years to finally get the majority of bad loans off the banks' books and more banks were nationalized. From 1992 to 2005, Japanese banks wrote off about 96 trillion yen, 19% of the country's annual G.D.P.

This became the turning point in the banking crisis, helped with a swift increase on the exports to the United States and China, a significant support on the recovery on Japan's economy.

Leaning on these insights, I start questioning my beliefs about the role of government in society and economy .