Japan 'zombie' Banks Repaid Most Of 1990s Bailouts

YURI KAGEYAMA

TOKYO (AP) — Japan recouped much of the public money it pumped into banks during the country's financial crisis last decade, when toxic loans totaled as much as $1 trillion, a top regulator said Wednesday.

Japan endured an economic and financial malaise in the 1990s known as the "lost decade" after a real estate bubble, built on excessive lending, burst. Insolvent lenders propped up by government bailouts became known as "zombie" banks, and cast a long shadow over the world's second-largest economy.

The banking system of the 1990s was burdened with 90 trillion yen ($930 billion) to 100 trillion yen ($1 trillion) of bad loans, Financial Services Agency Commissioner Takafumi Sato said Wednesday at the Foreign Foreign Correspondents' Club in Tokyo.

Banks have repaid 8.45 trillion yen of the 9.6 trillion yen of public money injected into the financial system during the troubled decade. "That was good business in retrospect," Sato said.

Reflecting the views of other Japanese officials and analysts, Sato said that what Japan underwent offers lessons for the global financial crisis unfolding today, including the need for public money to prop up weakened banks.