The first group of banks the Housing Loan Administration Corp. may sue over the "jusen" mortgage-lending debacle will be decided upon Sunday, corporation President Kohei Nakabo said Thursday.The corporation's legal counsel feels that several banks are responsible for the expansion of problem loans at the jusen, and will file damages suits around March against some or all of them after hearing their rebuttals, Nakabo said. The banks allegedly introduced problematic borrowers to the very mortgage lending firms they founded, seven of which went bankrupt due to bad loans.If HLAC takes action, the banks would be the first to be sued by the government-backed, debt-recovering body over the affair. Individual bankers may also be sued, Nakabo said, and at least one bank appears to have had structural problems irresponsible borrowers may have exploited.Nakabo refused to name potential defendants. But Kyodo News has reported that Sumitomo Bank, a major city bank, is among them. The corporation may publicize the names of the banks even if they voluntarily repay the debts in question, Nakabo said. By the end of 1997, the corporation listed 287 loan deals valued at a total of some 650 billion yen as having had serious problems. The corporation will also file similar suits as it continues to scrutinize the list, Nakabo said.The planned legal action is less about the money than the social principle that "you must pay for what you have done," Nakabo said. The Housing Loan Administration Corp. was set up in 1996 under a government-financed scheme to clear up the bad loans left by seven jusen firms that collapsed under the weight of huge irrecoverable loans estimated at 6.4 trillion yen.
