Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, October 16, from 9:14 a.m. to 9:41 a.m.)

[Opening Remarks by Minister Kamei]

I do not have anything particular to report to you about the cabinet meeting.

As for matters under my jurisdiction, we are in the final stages of drawing up the bill to introduce what is called ''moratorium'' scheme. In addition, we will fundamentally revise the financial inspection manual so as to examine not only the financial condition of financial institutions but also whether financial institutions are playing their role and performing their social responsibility. We believe that whether financial institutions provide loans from the standpoint of a conscientious adviser to borrower, as well as whether their financial condition is sound, is an important viewpoint, so we plan to revise the financial inspection manual from that viewpoint around the same time as the enactment of this bill. To that end, I will hold a hearing with FSA inspectors who have conducted, probably reluctantly, financial inspections based on the policy intended to create a society ruled by the law of the jungle, which represented the Koizumi-Takenaka pair's concept of what the financial sector should be like, and listen to their opinions based on their experiences as to how future inspections should be conducted under the new government's financial policy that I am advocating. Yesterday, I discussed this matter with the senior vice minister and instructed the FSA commissioner to arrange for the hearing to be held from 4 p.m. today in a conference room of the FSA. Thus we will make efforts to draw up the best possible bill.

Are news reporters covering the review of the postal businesses participating in this press conference? As the (extraordinary) Diet session is scheduled to be convened on October 26, we will submit at a plenary session a bill to suspend the sale of shares and assets of Japan Post, into which I hope to incorporate a basic policy for the review of the postal businesses. Although we initially intended to submit a separate bill concerning the basic policy, we now plan to incorporate the basic policy into that bill because it would be difficult to enact a separate bill during the extraordinary Diet session's period of around one month. Before that, I will seek a cabinet decision next week on the basic policy for the review of the postal businesses, so the study on this matter is ongoing.

I am glad to say that our work related to the postal businesses is proceeding smoothly. As I have said over and over again, I have no intention of restoring the postal businesses to the status they had been before they were broken up by the so-called Koizumi reform. We will make a fresh start in the extraordinary Diet session with a resolve to create vibrant postal businesses for the sake of local communities and the entire country.

That is all I have to say.

[Questions and Answers]

Q.

I would like you to look back at and comment on the one month since the inauguration of the new government, during which you have made significant progress in your work related to the bill to deal with curbs on new loans.

A.

As I previously said, I believe that God's hand or something like that played a role in creating this new government, which is charged with a historic mission. The government's efforts to accomplish its historic mission are now starting to get into full swing. For my part, I have devoted my efforts to the work related to the bill to introduce the ''moratorium'' scheme - the formal name of the bill has not yet been decided - and the review of the postal businesses in my jurisdiction. It is exactly one month since the inauguration of our government. I believe that during the one month, our work related to these two matters has proceeded almost as I initially planned. I have the impression that the three ruling parties are working as one to tackle these tasks. I also have the impression that civil servants are doing their best to tackle the tasks, and, as the minister in charge, I greatly appreciate their efforts. I will continue efforts in my area of jurisdiction to rehabilitate the Japanese economy, whose foundation has been shaken by the market fundamentalism. In addition, as I am a member of the Basic Policy Cabinet Committee, I intend to fulfill my responsibility in areas outside my jurisdiction, too. Therefore, I will invite senior officials of the FTC (Fair Trade Commission) next week for a meeting with me. When will the meeting be held?

(FSA staff)

We are trying to arrange it to be held Wednesday or Thursday.

A.

As I have said over and over again, the terrible situation of small and medium-size enterprises and small shops cannot be improved by support measures taken by the FSA alone, including the ''moratorium'' scheme and the facilitation of new loans. Although I will do what I can in my area of jurisdiction, I stressed to the Prime Minister (that measures taken by the FSA alone are not sufficient) and he completely agreed with me. It is necessary to create jobs for companies. In this respect, I have argued that Japan should create domestic demand through a supplementary budget for the current fiscal year and the budget for the next fiscal year. However, merely creating jobs for companies would not be sufficient. Even if  small companies receive orders, it would be meaningless unless they earn profits. The Koizumi reform has brought about a situation in which companies have jobs to do but cannot earn profits. This situation weakens the Japanese economy, and the foundation of SMEs and local communities and the lives of SME employees have been shaken, so we must create a situation in which a normal contractual relationship is formed between major companies and SMEs. Strictly speaking, this matter may be outside my jurisdiction. However, I believe that the FTC must take action with a strong interest in whether the contractual relationship between major companies and SMEs is normal. Therefore, I will invite FTC officials for a meeting with me next week. Although they may be wondering why they should be summoned to the FSA minister, we cannot improve the current situation through measures taken by the FSA alone in its narrow area of jurisdiction, as I already mentioned. We must ensure that even small companies get profitable jobs. Moreover, I will make efforts to ensure that through this process the wealth is distributed properly throughout the nation.

Q.

Senior Vice Minister Otsuka said yesterday that the ''moratorium'' may last even four or five years if agreed so between the lender and borrower, although you have been stressing all along that the period of moratorium should be around three years. Do you agree with what Mr. Otsuka said?

A.

What he said is reasonable. As a moratorium is based on an agreement between the lender and the borrower, essentially, the FSA should not dictate the terms of a contract or the duration of a moratorium in a one-size-fits-all manner. While we have to consider how long this temporary legislation should remain in effect, it would be problematic if SMEs serving as subcontractors and small shops misunderstood they would be stuck in this poor economic situation for many years. The new government must give them a ray of hope by taking economic and other measures one after another, creating jobs and ensuring that the way that jobs are contracted out to subcontractors will change. Our new government will not allow the current situation to last long. Therefore, it is possible that this will be enacted as a temporary law to remain in effect for one year, to be extended if the situation has not improved during the period. We should not enact this bill on the assumption that this situation will last for many years.

Q.

At the beginning of this press conference, you said you will fundamentally revise the financial inspection manual so as to examine whether financial institutions are performing their social role and acting from the standpoint of a conscientious adviser to borrowers. However, it would be difficult to quantify such activities, so how will you inspect...

A.

As I said, I will consider how to make our inspections effective. For that purpose, as I mentioned earlier, I will directly seek the opinions of inspectors in a hearing session starting at 4 p.m.

Q.

Do you mean that the details have not yet been decided?

A.

If I consider this matter on my own, it may be impossible to make our inspection effective. Inspectors know the situation in each region of the country, so everything will start after the hearing session. I hope as many inspectors as possible will join the hearing session.

Q.

Do you mean you will discuss this matter with them?

A.

Rather than hold discussions, I would like to listen to their opinions as to what we should do, although I will naturally tell them about my basic thinking. I would like to listen to their opinions as to how to have my thinking reflected in the inspection manual.

(End)