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Finland's banking laws and supervision were outdated in the 1980s as lending began to soar, Honkapohja said.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.