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Friday, March 14, 2008

Chamber again votes for Muto as row festers


Staff writer

The Lower House on Thursday approved the Liberal Democratic Party-New Komeito ruling bloc government's nomination of Toshiro Muto as new Bank of Japan governor, resulting in a split decision after the opposition-controlled upper chamber rejected him just a day earlier.

Meanwhile, the possibility emerged that the ruling bloc may present someone other than Muto.

"Renominating (Muto) is an option, but there is the possibility of other options as well," Chief Cabinet Secretary Nobutaka Machimura told reporters Thursday morning.

Kenji Yamaoka, Diet affairs chief of the Democratic Party of Japan, the largest opposition force, also said the LDP agreed to ask the government to submit a "new candidate" for the post by Monday. However, no names were mentioned, including whether it would be Muto again.

LDP Diet affairs chief Tadamori "Oshima said 'new,' so naturally, the new nominee will not be Muto, so there was no need for reconfirmation," Yamaoka said after emerging from a meeting with Oshima, who, on the other hand, refused to clarify.

As the end of current BOJ Gov. Toshihiko Fukui's five-year term approaches on March 19, the ruling bloc-led government is desperate to avoid a vacancy in the post.

"Triggered by the subprime problem, the economic situation, financial anxiety and falling stock prices have become extremely grave," Oshima said. "There must not be even one day of vacancy in the BOJ governor position."

He also told reporters the government may simultaneously submit a revision of the Bank of Japan Law to ensure there will be no vacancy in the central bank's top post. The possibilities include extending Fukui's term until a new governor is chosen.

Earlier Thursday, the Lower House approved Muto as BOJ governor, and Takatoshi Ito, a University of Tokyo professor, and Masaaki Shirakawa, a Kyoto University professor and former BOJ executive director, as the two deputy governors.

On Wednesday, the opposition-controlled Upper House voted down Muto and Ito, while backing Shirakawa.

Since the appointments for the BOJ's top positions need the approval of both chambers, Shirakawa is likely to become acting governor, running the BOJ until a new leader is elected, in accordance with the Bank of Japan Law.

The opposition parties, led by the DPJ, have protested over former Vice Finance Minister Muto's nomination, citing the necessity to secure the independence of monetary policy from the government, even though Muto has been deputy BOJ governor for the past five years.

During Thursday's plenary session, DPJ lawmaker Masaharu Nakagawa listed three conditions for the top BOJ post — the nominee must be able to communicate well with the market and have a thorough grasp of financial theory; have the strength to protect the independence of the BOJ; and have detailed knowledge of the international financial markets and be able to argue in the interest of Japan.

But Muto does not meet these qualifications, Nakagawa said.

"The independence of the BOJ depends on whether (the governor) can dauntlessly argue against political pressure to protect Japan's essential interests," Nakagawa said. "We want a different kind of leadership for the governor of the BOJ than Muto, who is known for his good coordination with the government."

Nakagawa also slammed Prime Minister Yasuo Fukuda for presenting the nominees only 12 days before Fukui's five-year term ends. Nakagawa also reminded lawmakers that the DPJ rejected the ruling bloc's bid to appoint Muto as deputy BOJ chief five years ago.

"When is Prime Minister Fukuda going to understand the reality that the Upper House is controlled by opposition parties?" Nakagawa asked.

New LDP faction

A new Liberal Democratic Party faction combining two groups, one led by Makoto Koga and the other by Sadakazu Tanigaki, announced Thursday that Koga will be named its leader and Tanigaki will take the No. 2 post.

Speaking at Thursday's inaugural meeting, Koga, currently head of the LDP's election committee, said, "We are now faced with a challenge as to how we can use our history and tradition to an advantage in this chaotic political situation."



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