JAPAN'S TRILLION-DOLLAR HOLE

REMEMBER THE GREAT SAVINGS AND loan debacle of the '80s, when Uncle Sam was forced to spend $150 billion to bail out hundreds of thrifts that had made bad loans, largely for bad real estate? Japan, famous for its ability to copy and enlarge upon invention, has an S&L-like banking scandal of even greater proportion--perhaps a trillion dollars' worth. The fiasco is so large it could even disrupt Wall Street, which relies heavily on Japanese money.

The scandal revolves around seven housing-loan companies, or jusen, created in the 1970s to provide loans to home buyers. During the "bubble" years of the...