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Japan: Cruel and unusual punishment

When the ministry of finance regulated banks in Japan the watchdog turned a blind eye to foreign banks doing things domestic ones couldn't. Not that there was anything illegal in the lucrative business of creating structured deals for firms intent on disguising losses. The new regulator - the FSA - takes a different view and has imposed an exemplary clampdown on Credit Suisse. There's apparently a limit on the number of times something legal can be done if it's deemed against the public interest. The bankers are bemused by the vagueness of it all and so is our reporter Steven Irvine.

  'Foreign capital' attacks
helpless Japanese banks -a Tokyo daily's take on
the CSFP episode

Picture the scene. You are on Tokyo's Ginza Street, a crowded four-lane highway that's the site of some of the world's busiest department stores. It's 3pm on a Saturday and a vehicle is driving in the middle of the road blaring out an order over its loudspeaker. All the cars quickly leave and old ladies in straw hats appear. They put tables, chairs and parasols in the middle of the road. Only three minutes earlier that would have meant certain death.

Something remarkably similar happened to the Credit Suisse Group in Japan. Picture Credit Suisse merrily driving down a four-lane road, with other banks motoring along behind. The law says the way the Swiss firm is driving is okay, and others are moving along in the same way. Then a regulator tootles down the road and blares out an order that is loud but maybe not very clear. Other cars start turning off and soon Credit Suisse is the last vehicle on a remarkably empty road.

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