What can financial-sector crises in Finland, Norway and Sweden in the early 1990s tell us about what’s going on in the U.S. today?

Quite a lot actually.

See if this sounds familiar: A country runs a big current account deficit. It experiences a huge increase in lending growth. Financial markets are deregulated. Then comes a shock, and a financial crisis begins and deepens.

Seppo Honkapohja, a member of the board of the Bank of Finland, told a group of financial professionals at the Federal Reserve Bank of Philadelphia yesterday that the banking crises faced by three Nordic countries led to big declines in economic performance.

I know what you’re thinking. How can you possibly compare the $11.5 trillion U.S. economy with Finland’s $151 billion economy?

Some economists consider the crises that hit Norway starting in 1987 and Finland and Sweden in 1991 among the five worst since World War II. (Spain in 1977 and Japan in 1992 were the other two.) So how they solved their excesses can offer lessons for the U.S.

Finland’s banking laws and supervision were outdated in the 1980s as lending began to soar, Honkapohja said. Banks were certainly following the letter of the law, but regulators weren’t viewing their actions in the overall scheme of the economy. And the tax system favored debt financing, so leverage rose substantially as did property prices.

The crumbling Soviet Union was one of Finland’s key trading partners, and as those ties were severed, the economy sustained a big shock.

In September 1991, the Bank of Finland was forced to take control of Skopbank, the country’s leading savings bank, and recapitalize it. It was as attention-getting as the U.S. rescuing Fannie Mae, Freddie Mac or American International Group.

And it was the catalyst for Finland to begin to fix its problems. When the crisis was over in five years, the country had half as many bank branches and the banking industry employed half as many people, Honkapohja said.

David R. Kotok, chief investment officer for the money-management firm Cumberland Advisors, sees the parallels between the current situation in the United States and the Nordic countries.

Where the end of the technology stock bubble in 2000 certainly eliminated trillions of dollars in stock market value, very little of that involved leverage, Kotok said. The credit crisis is all about inflated asset values that led to more leverage and an explosion in securities created from those loans.

The U.S. taxpayer is worried about what it’s going to cost to fix all of this.

The gross cost of cleaning up the banking mess in Finland was 9 percent of its gross domestic product. Once Finnish regulators had sold off some of the assets they’d rescued, the net cost was 5.3 percent of GDP.

Honkapohja’s quick calculation of the U.S. credit crisis response so far is about 7 percent of GDP. And he anticipates the net cost to be lower than that based on the experience of the Nordic nations.

One message he was clearly bringing was that banking-sector crises do end. But not overnight. Finland’s banking sector returned to profitability in 1996. And regulation of the banking industry there has improved greatly.

However, he also said there needs to be broad political support to turn things around. Given yesterday’s unexpected rejection by the U.S. House of Representatives of the $700 billion bailout plan, that’s something the lawmakers still need to work on.

Try not to read too much into this, but only one stock in the Standard & Poor's 500 index rose on Monday.

That would be Camden's own Campbell Soup Co.

The S&P 500 fell 106.62 points to close at 1,106.39 - a drop of 8.8 percent. And in a rare occurence, 499 of those stocks fell.

Campbell Soup bucked one of the worst trading days in more than 20 years, closing at $37.75 per share, up 12 cents, or 0.3 percent.

Now before anyone suggests that's because we're expecting to see longer lines at the soup kitchens, let me remind you that the food processor did announce a 14 percent increase in its dividend on Thursday.

(Campbell also announced on Monday that it was teaming up with singer/songwriter Jewel on an effort to support what used to be called the Future Farmers of America. But somehow I don't see that as market-moving news.)

The prospect of getting a $1 per share annually in dividends, starting Nov. 3, may have kept investors from canning Campbell's yesterday.

Or maybe the comfort foods of chicken noodle and tomato soup were still warming the bellies of some money managers when the U.S. House of Representatives voted down the $700 billion bailout package for the financial sector, igniting the market sell-off.

Still Campbell could be in the soup on Tuesday along with the rest of the market. After all, most of us can barely remember what we had for dinner last night much less recall why we bought a stock in the first place.

One of the fastest-growing Philadelphia-area companies is getting a new name.

NeatReceipts Inc. ranked No. 66 on the latest Inc. 5000 list of the nation’s fast-growers. As of today, it’s been rebranded as the Neat Co. because, co-founder Rafi Spero said, it had outgrown its name.

The company started out six years ago selling a receipt-scanning device in airport kiosks. Now it has a number office hardware and software products to help business people digitize and organize their paper documents.

In connection with the name change, the company is launching redesigned versions of its products. Its employs about 160 people and had revenue of $11.7 million in 2007.

More than 160 economists last week signed an open letter to the leaders of the U.S. House of Representatives and Senate expressing concern over the $700 billion financial-sector bailout plan.

Emanating from the lauded University of Chicago economics department, the letter criticizes the plan’s fairness, ambiguity and long-term effects. (Besides 44 Chicago school signatories, there were 14 from the University of Pennsylvania.)

The Chicago school pans Treasury Secretary Henry Paulson’s initiative as a “subsidy to investors at taxpayers’ expense.” The economists agree that “bold action” is needed to keep the financial system functioning, but this bailout isn’t it.

“We ask Congress not to rush,” it states.

I expressed some of the same worries last week about the pell-mell push this massive, ill-defined effort was getting.

And in response to my column, Villanova School of Business finance professor David Nawrocki told me that I and 166 economists are wrong.

“We need this rescue plan,” Nawrocki wrote me in an e-mail. “It is a bigger-scale problem than Resolution Trust … but it is basically the same issue.”

Nawrocki, like others, points to the success of the $125 billion Resolution Trust Corp. that cleaned up the mess left by the failure of dozens of savings and loans in the late ’80s and early ’90s. The federal entity took on the assets of those institutions, sold them off in a 48-month period, and disappeared.

To me, the big difference is that the Paulson plan would have the federal government buying bad assets from financial institutions that still have a pulse - good or bad - and sitting on them until it can auction them off. While we don’t have details of how the mechanism would work, it stands to reason that some “bad” banks would be able to whistle past the graveyard after littering it with their junk.

Is that a good idea? Shorn of the liabilities of their bad decisions, will those bankers suddenly make ethical and sound lending choices, once again lubricating the gears of the American economy?

Wouldn’t it be better to let the Washington Mutuals of the world fail?

Not to Nawrocki. He doesn’t see why any banks need to collapse. “I understand the natural evolution of value creation and value destruction, but I like the idea that a lot of people at the lower levels of these institutions still have a job at the end of the day,” he said.

Counter to the free market/no regulation crowd, Nawrocki said governmental intervention is needed to jump-start a market for assets that no one wants to touch right now. Only some federal entity willing to step up and buy mortgage-backed securities and other derivatives can begin to restore confidence, he said.

“Markets are powerful when they can do price discovery,” Nawrocki said. The trouble with a lot of the derivatives dreamed up on Wall Street is that they lack transparent secondary markets and that’s why no one knows what these “toxic” assets are worth.

He’s been telling his students since January that Congress was going to have to pass some kind of rescue plan. His estimate then was $400 million to $500 million.

Despite the poor sales job by Paulson and others on this rescue plan, the country can’t afford to wait, according to Nawrocki.

“We need the Paulson plan to start us out of this mess and then Congress has to revamp the whole market regulation process,” he said.

“We are not bailing anyone out. We are fighting for the survival of our credit market system,” he said. “Credit is needed in order to maintain a level of GDP - if the credit goes, the GDP goes. Very simple.”

In what is usually the quiet before earnings season begins, all stocks were whipped around last week by the drama in Washington over the financial-sector bailout.

So I’d be careful reading too much into the 26 percent decline in the stock price of Omega Flex Inc. Its shares closed at $22.95 on Friday. The Exton-based maker of flexible metal hose did not issue any press releases last week.

The biggest gainer among local stocks was Nobel Learning Communities Inc., the West Chester operator of private schools. Shares rose 25 percent to close Friday at $15.93. It received an unsolicited $17 per share offer from Knowledge Learning Corp. , of Portland, Ore.

Anyone else hear the echoes of 1992 in the federal seizure and quick sale of Washington Mutual Inc. to JPMorgan Chase & Co.?

I'm thinking about Meritor Savings Bank, better known by the bank's storefront name of Philadelphia Savings Fund Society.

On Friday, Dec. 11, 1992, regulators seized Meritor and immediately sold 27 branches and $2.5 billion in deposits to Mellon Bank Corp. for $181 million. Meritor shareholders were wiped out.

Now there is a critical difference between Meritor and Washington Mutual, or WaMu. Meritor was being nursed back to health following an overly aggressive expansion in the 1980s. WaMu has been drowning in a mortgage mess of its own making and seemed to be losing the battle.

Both, however, were hurt by weak national economies and a housing market downturn. And JPMorgan's glee at acquiring a "fabulous franchise," in the words of its CEO Jamie Dimon do mirror Mellon's thrill at snapping up Meritor's branches.

"We wanted to win this bank. We wanted to own this bank," said Mellon vice chairman Tom Donovan back then.

But the seizure of Meritor angered some large shareholders who thought the federal government had changed the rules of the accounting game. Their lawsuit has gone on for years and, despite the odds, they won a judgment of $371.7 million, or $6.75 per share, in February 2006. It's on appeal.

Does that mean WaMu shareholders have any hope of recovery? I wouldn't hold my breath. (And if Meritor shareholders held their breath between 1992 and 2006, I don't like their chances either.)

But you can be sure that the questions will be asked whether federal regulators had to pull the trigger so fast on WaMu. They didn't even wait until the customary Friday night, so that's an indication that they felt they had to move.

And like Mellon back in the 90s, JPMorgan got something it wanted all along.

Merck & Co. Inc. becomes the latest pharmaceutical company to agree to disclose how much money it gives to health-related institutions.

But it will go one step further: Merck will specify payments it makes to doctors.

It announced the moves one day after Eli Lilly & Co. became the first drug maker to agree to spell out how much it pays doctors for speeches and advisory services. Lilly will disclose any payment more than $500.

The drug industry has come under pressure from Congress to become more transparent over its financial support for continuing medical education and professional associations. The reason? The worry that by paying to support educational programs that discuss new drugs, companies have a powerful platform to prompt doctors to prescribe them.

GlaxoSmithKline PLC last month said it would begin publishing its educational and charitable grants on a quarterly basis, starting in February.

Merck said it will publish grants made by its Global Human Health division for “professional education initiatives” to patient organizations, medical professional societies and other groups, starting in October.

During 2009, Merck will expand the disclosure to encompass other grants made to medical, scientific and patient organizations.

In addition, Merck says during 2009 it will begin revealing how much it pays physicians who speak on behalf of the company or its products. So far, Eli Lilly is the only other drug maker to pledge to do that.

Make no mistake, Merck and other drug makers may be voluntarily doing this, but they’re being pushed, primarily by Sen. Charles E. Grassley (R., Iowa). There is pending legislation, called the Physician Payments Sunshine Act, to force disclosure of the industry’s financial ties to doctors.

Sponsored by Grassley, it would require disclosure of payments of more than $25 and levy penalties of up to $100,000 for failure to do so.

As the debate goes on over whether Congress should approve a $700 billion bailout for the financial industry, I think we need to be clear on one thing:

This is not a plan to fix the U.S. economy. This is a plan that’s intended to stem the credit crisis.

The credit markets are certainly an important subset of the $14 trillion U.S. economy. But even if Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke convince Congress to OK some sort of bailout, the U.S. economy will remain weak.

No one’s calling for robust growth in gross domestic product. Consumer spending is trending down. Employers are cutting jobs and the unemployment rate has been on the rise.

A $700 billion TARP (which stands for the “troubled asset relief program” that Paulson invoked in his testimony) isn’t going to make us all feel like making this the best Christmas ever.

Far from it. As a nation, we appear to have run out of assets to make a quick killing on. Whether it was tech stocks, resort-area condos or Beanie Babies, those things we could buy and sell at ever-escalating prices are few and far between.

Unless you own some land that sits on top of the Marcellus shale formation (believed to contain one of the biggest deposits of natural gas in the United States), you probably aren’t bragging about how much you’re worth right now.

And deleveraging this nation is simply going to take years. As this spring’s $160 billion tax rebate effort showed, scattering huge amounts of money across the land isn’t going to fix the “systemic problems,” as Paulson calls them, that have built up over the years.

Will a $700 billion bailout aimed at lenders begin to fix the systemic problems? Paulson and Bernanke believe so. And they want Congress to believe and all of us too. But they’re not sure it will work and they can’t be, because we haven’t faced a problem of this magnitude before.

They’re trying to restore confidence in the credit markets where banks are leery of lending to other banks, where few in business seem willing to trust the person sitting across the table.

They warn that the risks of doing nothing are greater and could cost all of us even more. What if, instead of rubber-stamping the Paulson/Bernanke TARP, Congress approves a general framework to begin to assume this toxic debt? Sure, approve some money to actually buy these assets, but not the full bazooka.

Wouldn’t it send more of a message to the global markets that the Bush administration and lawmakers were methodically tackling possible solutions, rather than what it appears: A panic to pass something - anything - fast.

Over the last 13 months, the Federal Reserve has employed a number of its traditional tools and tried other quite inventive approaches to keep the credit markets moving.

Still the financial sector has limped from crisis to crisis. As a total outsider, the last two weeks have looked to me like the Washington financial intelligentsia have been making it up as they go.

How can that possibly inspire confidence?

As the debate goes on over whether Congress should approve a $700 billion bailout for the financial industry, I think we need to be clear on one thing:

This is not a plan to fix the U.S. economy. This is a plan that's intended to stem the credit crisis.

The credit markets are certainly an important subset of the $14 trillion U.S. economy. But even if Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke convince Congress to OK some sort of bailout, the U.S. economy is still weak.

No one's calling for robust growth in gross domestic product. Consumer spending is trending down. Employers are cutting jobs and the unemployment has been on the rise.

A $700 billion TARP (which stands for "troubled asset relief program") isn't going to make us all feel like making this the best Christmas ever.

Far from it. As a nation, we appear to run out of assets to make a quick killing on. Whether it was tech stocks or condos or Beanie Babies, those things we could buy and sell at ever-escalating prices are few and far between.

Unless you own some land that sits on top of the Marcellus shale formation (believed to contain one of the biggest deposits of natural gas in the United States), you probably aren't bragging about how much you're worth right now.

And deleveraging this nation is simply going to take years. As this spring's $160 billion tax rebate effort showed, scattering huge amounts of money across the land isn't going to fix the "systemic problems," as Paulson calls them, that have built up over the years.

Will a $700 billion bailout begin to fix the systemic problems? Paulson and Bernanke believe so. And they want Congress to believe and all of us too. But they're not sure and they probably can't be, because we haven't faced a problem of this magnitude before.

They're trying to restore confidence in the credit markets where banks are leery of lending to other banks, where few in business seem willing to trust the other person sitting across the table.

They warn that the risks of doing nothing are greater and could cost all of us even more. What if, instead of rubberstamping the Paulson/Bernanke TARP, Congress approves a general framework to begin to assume this toxic debt? Sure, approve some money to actually buy these assets, but not the full bazooka.

Wouldn't it send more of a message to the global markets that the U.S. administration and lawmakers were methodically tackling the possible solutions, rather than what it appears: A panic to pass something - anything - that looks like we're making it up as we go.