Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, January 29, 2010, from 10:38 a.m. to 10:52 a.m.)

[Opening Remarks by Minister Kamei]

At today's cabinet meeting, the Prime Minister instructed us to make sure to support the economy by quickly implementing the supplementary budget, which was enacted yesterday.

[Questions and Answers]

Q.

Regarding the Japan Post, in the ongoing hearings, I understand that private financial institutions are expressing opposition to the plans to abolish the ceiling on the savings amount (applied to each customer) or to expand the scope of its business operations. As regional banks, “shinkin banks” or credit cooperatives apparently have a particularly strong sense of crisis, could you comment on that point? How do you intend to deal with these opposing views?

A.

As I told representatives of some nationwide associations of financial institutions yesterday, the purpose of the reform of the postal businesses would be called into question if the private sector shrank because of their expansion. The Japanese economy does not exist for the sake of the postal businesses. That is quite obvious. Therefore, we should ensure that a renewed start for the postal businesses will help to further develop the private sector. I am now racking my brains as to how the postal businesses should start over.

While there are various questions related to what Jun-chan (former Prime Minister Junichiro Koizumi) intended to do after the postal privatization, the government still owns shares in the postal businesses. They have been engaging in various business operations in the course of privatization. If we consider what problems these operations have caused in relation to the private sector, it will be instructive. Now, we have only two weeks left to consider this and other issues. I am too busy to have enough time to spare. This really is a problem, and we will be a bit behind the original schedule. As there will be little time left for drafting a bill, bureaucrats may have to work overnight. However, we will make sure to submit a bill even if we are a bit behind schedule. As my final decision will be delayed, I would like to take various opinions into consideration all the more.

Q.

In relation to the postal businesses, I guess that foreign insurance companies, for example, may be hoping to use the network of post offices to sell their new insurance products, or domestic insurance companies, too, may be hoping that the network will be opened sufficiently so that it can be used to sell their financial products. What approaches — for example, forming alliances with these foreign and /or domestic companies — do you think should be taken?

A.

I did not hear about any such specific matters yesterday. In any case, as I have said over and over again, Japan Post will pursue new businesses from the perspective of how it can contribute to the people, to local communities, to the Japanese economy and to the global economy, so I do not have an exclusionism approach in mind at all.

Then, how can I put it into place. There is a problem in the case of the insurance business for insurance. As you know, there are insurance agents. Small agents are scattered across Japan. If such small agents are forced out of business as a result of the renewal of the postal businesses, the purpose of the reform of the postal businesses would be called into question. Such agents, like small post offices, have played a role as the guardians, in a sense, of local communities. As we care about small post offices, we cannot but care about such insurance agents. Therefore, we will fully take into consideration matters like that when we let the postal businesses make a renewed start.

Q.

Regarding a proposal for financial regulation that was abruptly announced by President Obama last weekend, how do you think it could affect Japanese banks?

A.

President Obama has presumably made that proposal in the knowledge that it would have some temporary impact on stock prices. He nonetheless made the proposal as he learned from his bitter experience that the government must play the leadership role in order to ensure that the financial sector functions appropriately. I think he has exercised admirable leadership.

Q.

Mitsubishi (Bank of Tokyo-Mitsubishi UFJ) of Japan, for example, has invested in Morgan Stanley, so if U.S. banks are affected, I suppose that Japanese banks will also be affected. How much do you think…

A.

That is beyond my knowledge. You should ask the banks' president. Such specific matters are beyond my knowledge. Certainly, there will be some impact. However, that proposal is intended to prevent something worse from occurring… In the future, President Obama's proposal could have a positive impact on Bank of Tokyo-Mitsubishi UFJ and other banks. Although things may be going well at this moment, the impact of the damage that may be caused should bubbles arise and an incident burst just like the implosion of the subprime mortgages would be much worse.

Therefore, I think it is natural that President Obama has called for discipline, if I may say so, in the U.S. financial and capital markets from the perspective that the United States should assume responsibility for the global economy.

Q.

In relation to that issue, is Japan considering following suit.

A.

The FSA (Financial Services Agency) has already been making serious efforts to guide and supervise financial institutions so as to ensure that they fulfill their social function to properly provide finance as usual. The FSA is working very hard. Although the philosophy of supervision and inspection has changed radically, or I should say I have changed the philosophy, I believe that FSA staff members are performing their tasks properly based on the new philosophy.

Q.

Am I correct in understanding that you do not have any plan to introduce a similar regulatory measure in Japan in response to President Obama's proposal?

A.

It is not the question of acting “in response” or… When President Obama does something admirable, I respect his action and I may even look at it as a reference for my actions, but I am not such an impulsive man as to be automatically prompted to do whatever he does.

(End)