ID :
23645
Fri, 10/10/2008 - 15:01
Auther :
Shortlink :
https://oananews.org//node/23645
The shortlink copeid
LDP eyes reviving public fund-injection law for local lenders+
TOKYO, Oct. 9 Kyodo - The ruling Liberal Democratic Party is considering reviving a law to inject public funds into capital bases of regional financial institutions as part of envisioned additional economic stimulus measures, LDP lawmakers said Thursday.
The LDP judged that it is necessary to stabilize the management bases of
regional and shinkin banks as well as credit unions through fund injection in
order to ensure smooth funding for local businesses amid increasing concerns
over the impact of the U.S.-triggered global financial crisis on the Japanese
economy, the lawmakers said.
The fund-injection law became effective on Aug. 1, 2004, as temporary
legislation and the period of application for public funds for financial
institutions under the law expired on March 31 this year.
Despite the expiration of its application period, the law itself is still
effective, so the LDP will consider partial amendment to the law regarding the
application period, the lawmakers said.
The LDP came up with the measure as Prime Minister Taro Aso instructed the
party and its coalition partner the New Komeito party to compile additional
measures to stimulate the nation's sluggish economy amid the intensifying
global financial crisis.
Former Chief Cabinet Secretary Nobutaka Machimura said at a meeting of his own
faction, ''We have (effectively) abolished the law as we thought that Japanese
banks have become less vulnerable to bankruptcy, but we will revive it so as to
be doubly sure'' of the stability of the financial system.
The LDP will discuss the matter in its project team tasked with dealing with
the global financial crisis, the lawmakers said.
Former Financial Services Minister Hakuo Yanagisawa, who heads the project
team, said, ''We should think about (reviving the law) as a precaution.''
Only two financial institutions received public funds under the law. Kiyo
Holdings Inc. based in the city of Wakayama received 31.5 billion yen, while
Howa Bank based in the city of Oita received 9 billion yen.
The Financial Services Agency chose not to extend the application period under
the law before it expired in March, leaving the law effectively abolished. The
agency then said the Japanese financial system was quite stable.
However, the agency has recently closely watched situations surrounding
regional banks as increases in loan-loss reserves for possible failures of
their clients have been weighing on their management, according to agency
officials.
Currently, the government is allowed to inject public funds into capital bases
of financial institutions under the Deposit Insurance Law only to avert a
financial meltdown or if any detrimental disruption in a local economy is
expected without the measure.
The LDP judged that it is necessary to stabilize the management bases of
regional and shinkin banks as well as credit unions through fund injection in
order to ensure smooth funding for local businesses amid increasing concerns
over the impact of the U.S.-triggered global financial crisis on the Japanese
economy, the lawmakers said.
The fund-injection law became effective on Aug. 1, 2004, as temporary
legislation and the period of application for public funds for financial
institutions under the law expired on March 31 this year.
Despite the expiration of its application period, the law itself is still
effective, so the LDP will consider partial amendment to the law regarding the
application period, the lawmakers said.
The LDP came up with the measure as Prime Minister Taro Aso instructed the
party and its coalition partner the New Komeito party to compile additional
measures to stimulate the nation's sluggish economy amid the intensifying
global financial crisis.
Former Chief Cabinet Secretary Nobutaka Machimura said at a meeting of his own
faction, ''We have (effectively) abolished the law as we thought that Japanese
banks have become less vulnerable to bankruptcy, but we will revive it so as to
be doubly sure'' of the stability of the financial system.
The LDP will discuss the matter in its project team tasked with dealing with
the global financial crisis, the lawmakers said.
Former Financial Services Minister Hakuo Yanagisawa, who heads the project
team, said, ''We should think about (reviving the law) as a precaution.''
Only two financial institutions received public funds under the law. Kiyo
Holdings Inc. based in the city of Wakayama received 31.5 billion yen, while
Howa Bank based in the city of Oita received 9 billion yen.
The Financial Services Agency chose not to extend the application period under
the law before it expired in March, leaving the law effectively abolished. The
agency then said the Japanese financial system was quite stable.
However, the agency has recently closely watched situations surrounding
regional banks as increases in loan-loss reserves for possible failures of
their clients have been weighing on their management, according to agency
officials.
Currently, the government is allowed to inject public funds into capital bases
of financial institutions under the Deposit Insurance Law only to avert a
financial meltdown or if any detrimental disruption in a local economy is
expected without the measure.
