At Last, Japan Tackles Its Bank Crisis

Japanese prime minister Keizo Obuchi couldn't come to Washington next week with an empty briefcase. That's why he cut a deal with his political opponents Friday over stalled banking reform legislation -- a deadlock that had exasperated Washington. "This appears to be an important step, but they still have a major chasm to cross," says TIME reporter Bernard Baumohl. "At least now Obuchi has some news for President Clinton. It would have been terribly embarrassing for him to come to Washington with no plan to reform his country's banking sector, which many see as a crucial step to overcoming the Asian crisis."

Details of the plan are sketchy, although it appears that opposition demands to let bad banks fail have been met by making assistance to the stricken Long Term Credit Bank -- one of the country's largest -- conditional on effectively declaring it bankrupt. "Compromise between Obuchi and the opposition is the first good sign that they're moving toward resolving the banking crisis," says Baumohl. "But with Japan's banks holding as much as $1 trillion in bad loans, there's a lot more to be done."