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Monday, May 19, 2003
Mandarins hit talk shows, debate Resona Group bailout
Ruling and opposition lawmakers were at odds Sunday in assessing the significance and seriousness of the financial problems facing the Resona banking group.
The ruling camp was busy playing down the effective nationalization of the group, while the opposition described the nation's banking system as being in a "crisis."
The government convened a financial crisis council Saturday and decided to use a massive amount of public funds -- probably totaling some 2 trillion yen -- to effectively nationalize and bail out the nation's fifth-largest banking group.
But during TV debate shows aired Sunday, ruling coalition lawmakers insisted the bailout plan is aimed at pre-empting a financial crisis.
Opposition lawmakers, meanwhile, argued that the government is using deceptive wording and that the move will unfairly obscure the responsibility of the government and the management of the banking group.
"So far, 36 trillion yen in public money has been spent to assist financial institutions, but we're still in a situation like this," Naoto Kan, president of Democratic Party of Japan, the largest opposition force, said on Fuji Television.
"Under the administration (of Prime Minister Junichiro) Koizumi, it's impossible to carry out fundamental financial reforms."
Ever since a financial crisis hit the nation's banking system in 1998, The DPJ has been calling for the government to forcibly inject public funds into ailing financial institutions and to dismiss managers at those banks.
Liberal Democratic Party policy chief Taro Aso argued that, based on information he has obtained, no other major banks will report a sudden fall in their capital-to-assets ratio similar to the drop recorded by the Resona group after reassessing their deferred tax assets. Aso made the comments on a separate TV program aired by NHK.
On the same NHK program, Aso and his counterparts from the two other parties in the ruling triumvirate -- New Komeito and the New Conservative Party -- indicated that they believe a supplementary budget for the current fiscal year is necessary to stop deflation. This would help the banking sector as well as the whole economy, they said.
"The top priority now is not fiscal rehabilitation," said New Komeito policy chief Kazuo Kitagawa. "Demand needs to be created and we have to create public demand if the private sector can't."
Compiling a supplementary budget is a political taboo for Koizumi, who has advocated an austere fiscal policy.
But pressure on Koizumi to expand public spending is expected to increase as the Resona bailout will refocus people's attention on deflation and other current economic difficulties.