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    U.S. banks at the end of the 1980's

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    According to Gerald Baker, columnist for the London Financial Times, November 23, 1999, "In the United States, banks are, by whichever measure chosen, in unusually good shape for this stage of an expansion. There are few signs of emerging excesses that even undermined America's own banking system at the end of the 1980's...Again, of course, a significant fall in asset prices would harm balance sheets, but not do anything like the scale in post-bubble Japan."

    (a) What problems beset U.S. banks at the end of the 1980's?
    (b) How did these problems compare with those in Japan?
    (c) How does a fall in asset (stock or property) prices hurt banks?

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    (a) What problems beset U.S. banks at the end of the 1980's?

    Many of the big U.S. banks had to undergo restructuring at the start of the 1980's, following the collapse of oil prices, with the result that major banks disappeared, partially absorbed in other banks. In the 1980's big scaled U.S. manufacturers downsized, becoming lean and competitive after several years of aggressive action to cut costs and boost productivity. At the end of the 1980's, America's thrift banks encountered a bursting of the real estate bubble. But they are restructured with the helping hand of the U.S. Government successfully. Public and private pension funds started the 1980's with serious underfunding problems, but by the 1990's had dramatically raised performance and become major suppliers of capital to the rest of ...

    Solution Summary

    Trace what happened in U.S. banks at the end of the 1980's.