THE TRIUMPH OF GREED OVER EXPERIENCE:

Chinese Banks Test Investors' Patience: Foreign firms buy stakes to get into the huge market, but bad debt and corruption remain. (Don Lee, September 11, 2005, LA Times)

Foreign companies have been practically stepping over one another to invest in Chinese banks, but it will probably be a long time before anybody walks away with happy returns.

Just ask Frank Newman, a turnaround artist who took the helm at Shenzhen Development Bank a few months ago. When the former No. 2 man at the U.S. Treasury Department arrived at the bank, an institution with $25 billion in assets, he was amazed that there were no financial reports on the company's divisions. The bank's thick book of bad debts was fraught with surprises: One real estate loan had been neglected for 12 years. Many others, he learned, were actually collectible because borrowers had hidden assets.

"In all my years of banking, I've never seen anything like it," said the 63-year-old Newman, who helped revive Bank of America in the 1980s and Bankers Trust a decade later.

Analysts consider China's financial sector to be the weakest link in the nation's booming economy.

Folks who look at China and can't see that it's regime is the weak link deserve to lose their shirts.

Posted by Orrin Judd at September 11, 2005 12:00 AM