A bigger stick would surely have helped the authorities to persuade banks to take more decisive actions. Finally, in the late 1990's and early 2000's, various policy measures were introduced to better align the incentives of banks. They included the introduction of more precise standards for disclosure and prompt corrective actions by the FSA.
The functions of the Deposit Insurance Corporation were strengthened as well. The Bank of Japan encouraged Japanese banks to make an appropriate evaluation of their loans by using discounted cash flow method. These measures finally generated proper incentives for Japanese banks to put their houses in order. The recent removal of the blanket guarantee of deposits was a symbolic event in this regard.