Comment on Japan and the Asian Financial Crisis

economic situation in Japan and the macro policies they have followed. He presents his own view of desirable policy changes. Second is a summary of banking problems, including non-performing loans, bank failures and insolvencies. This, the longest section of the paper, comments on the policies and actions to deal with financial problems. Committee (Japan). The report correctly distinguishes between "too big to close" and "too big to fail", recognizing that it is often prudent to keep banks open while removing management and owners of equity. informative about the jusen and the political issues involved in closing these mortgage lenders. The main story is familiar. A main conclusion that I draw is that, once again, the problem was forbearance, not lack of information or the absence of regulation and supervision. There may have been gaps in regulation and supervision, but more timely and more accurate information would not have made much difference. The political powers failed to take decisive action, just as they failed in the United States. Faced with mounting losses at thrift institutions, U.S. regulators allowed those losses to increase. Their Japanese counterparts did the same.