As the credit crisis has spread these past months, no Indian banks have come close to failing the way so many US and European financial institutions have. None has required the kind of emergency injections of capital that Western banks have needed. None has had the huge writedowns that were par for the course in the West. As the bubble has burst, which lenders have taken the hit? Why, the private equity and hedge fund lenders who had been so eager to finance land development. Us, in others words, rather than them. Why is that not a surprise?
When I asked Kapoor for his take on what had happened in the United States, he replied: “We recognize it as a problem of plenty. It was perpetuated by greedy bankers, whether investment bankers or commercial bankers. The greed to make money is the impression it has made here. Anytime they wanted a loan, people just dipped into their home ATM. It was like money was on call.”
So it was. And our regulators, unlike theirs, just stood by and let it happen. The next time we're moving into bubble territory, perhaps we can take a page from Reddy’s book— sometimes it's better to apply the brakes too early than too late. Or, as was the case with Greenspan, not at all.
None of this is to say that the global credit crisis hasn’t affected India. It certainly has. I’ll be back after the holidays with more columns from India, including how 15 September —the day Lehman Brothers Holdings Inc. defaulted— changed everything, even here, on the other side of the world.
©2008/The New York Times
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