June 22, 2009

Monday's Financial Times presents another article on Japan, hypothesizing that Japan's approach to overhauling regulations -- in response to their own banking crisis -- might be more appropriate than the direction currently being taken in the U.S.The FT refers to the overly chummy relationship between the Japanese regulators and the banking industry in the 1990s, most egregiously characterized by parties that banks would throw for regulators, whereby the regulators were treated to fine beef cuisine at restaurants featuring micro-skirt clad waitresses wearing no panties.

Stories of these "no pan shabu-shabu" events became well known after the collapse of Japan's banking industry, and a deep examination as to what went wrong in their regulatory regime had been undertaken.However, converse to the direction taken in America, where lawmakers have decided that more micromanagement by the regulators is the solution to deal with the industry's problems, in Japan they actually decided to reduce the amount of direct regulatory interference.