This is a remarkable saga about the demise of Long Term Credit Bank and its improbable recovery as Shinsei Bank. It is a story about the Japanese vision of the role and purpose of banks and the perils of globalization. It is also a cautionary tale about the limits of reform.
Why and how did an obscure U.S. venture capital firm named Ripplewood buy LTCB? Drawing on extensive interviews with many of the main players, Gillian Tett gives us an insider's view about what went terribly wrong at LTCB and why this eventually led to a "vulture fund" swooping down on the carcass of one of Japan's venerable banking institutions.
The problems of LTCB were the same as those that have rendered all of Japan's banks awash in bad loans: They all piled into the frothy real estate market in the 1980s, lending with abandon and no credit-risk assessment. Like lemmings dismissing rumors about a cliff ahead, Japanese bankers repeated the mantra that land prices always rise -- our collateral is solid.