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Daiwa Bank Scandal In New York: Its Causes, Significance, And Lessons In The International Society, Mitsuru Misawa

Vanderbilt Journal of Transnational Law

The New York Daiwa Bank scandal, which involved Daiwa Bank's concealment of $1.1 billion in losses from the illegal funding of U.S. Treasury bonds and the diversion of another $100 million in losses incurred by Daiwa Bank Trust Company, resulted in the most severe economic penalties ever imposed by the United States against Japan. These penalties included the termination of Daiwa Bank's U.S. operations and the reinforcement of the increased rates at which Japanese banks can borrow U.S. currency--the "Japanese premium." In addition, the Daiwa Bank case substantiated an international distrust of Japanese financial institutions, which are closely aligned with …