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July 14, 2009
NEW YORK — Japan's economy was paralyzed for a decade as banks failed to deal with their troubled loans. That's why it's nothing short of stunning to discover some U.S. banks are doing the same thing now.
Despite all the tough talk out of Washington and Wall Street about how the U.S. can't repeat what happened in Japan, the reality is that banks are granting extensions to borrowers in one key category, commercial real-estate loans, so they don't default. It's a bet that economic conditions will improve before the loans come due.
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