Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, March 5, 2010, from 8:50 a.m. to 9:17 a.m.)

Q.

At your recent meeting for an exchange of views (about the facilitation of financing toward the end of the fiscal year), representatives of small and medium-size financial institutions said that a rise in the ceiling on the postal savings amount per customer is a matter of life and death for them and that it may actually undermine the facilitation of financing for small and medium-size enterprises. How do you intend to deal with these matters?

A.

As I always say, we should not create a situation in which post offices alone would enjoy a good time while “shinkin banks,” credit cooperatives and second-tier regional banks would struggle. That is quite obvious. Local communities are protected not only by post offices. They are also protected by “shinkin banks,” credit cooperatives and insurance sales women. The spirit of so-called universal service has been maintained due to the contributions or involvement of various private-sector entities. Therefore, doing something that would undermine this situation would not be called “reform” in its true sense.

However, the Koizumi-Takenaka reform (pursued by former Prime Minister Koizumi and former Minister of Economic and Fiscal Policy Takenaka) has already damaged the network of post offices, causing it to stop functioning. That is the reality now. I am considering how to reinvigorate the network and what should be done to enable it to better fulfill its social responsibility.

Therefore, around next week, we will make a last-ditch, strenuous effort. However, I will need to participate in deliberations at a Diet committee meeting. Perhaps we should work overnight, but it will be difficult to do so, as various people are involved. Around next week, we will work hard. Newspapers are abuzz with news about this issue.

Although financial institutions readily complain of a squeeze on private-sector businesses, they should, as I often tell them, first question whether they are making adequate efforts. They are clamoring for the creation of a favorable environment for their businesses. Although that is also important, they should properly perform their social responsibility. Without carrying out appropriate lending activity, they complain of a squeeze on private-sector businesses. When a situation favorable for the general public or local residents arises, they argue that it is harmful for their business. It is no good making an argument like that.

Regarding issues related to consumer loans, too, I gave a similar admonition at the recent meeting (for an exchange of views about the facilitation of financing toward the end of the fiscal year). If they think that they will face a difficult situation if the amended Money Lending Act is (fully) put into force in June… Megabanks, which raked in profits by using their consumer loan affiliates, now face regulatory constraints on this arrangement. I said that if they complain about the regulation, they must present counterproposals as to how megabanks themselves will meet the urgent fund needs of ordinary people. I said that unless they present counterproposals, it would be useless for them to put pressure on me through behind-the-scenes maneuvering because it has become difficult to do business through their affiliates. First, they should make their own efforts.

As I often say, small and medium-size regional financial institutions should examine whether they are really making contributions to local communities and cooperative members in various aspects.

What surprised me was that they oppose a rise in the ceiling on the pay-off scheme (deposit insurance) on the ground that it may reduce their share of deposits. That surprised me. They are less creditworthy than megabanks. Therefore, I proposed to complement their creditworthiness. If they say they have difficulty competing with something like government guarantee (for the postal savings system), the solution would be, from an objective perspective, to raise the ceiling on the payoff scheme. That would provide credit enhancement like government guarantee so as to generate confidence that deposits at credit cooperatives and “shinkin” banks will be safe even in an emergency. There would be confidence that deposits will be safe at not just megabanks but any financial institutions. That would help them collect deposits. However, they reject this line of thought and argue that at present, the portion of deposits that exceed the 10-million-yen ceiling at megabanks is flowing into their accounts and that if the ceiling on the pay-off scheme is raised, their share of deposits will rather decline. What a backward-looking viewpoint! I believe that instead of such a viewpoint, they should take a forward-looking stance. That is what they should do.

Q.

In relation to the money lending business, you have been making comments along the line that megabanks should consider meeting ordinary people's urgent needs for small-lot loans. Do you think that the project team regarding the money lending business should also consider how major financial institutions should respond to such needs?

A.

The project team is studying matters like that. In any case, I think that megabanks might as well come out into the open, rather than hiding behind their money lending affiliates, and try to meet urgent needs for small-lot loans under the favorable terms that used to be offered for consumer loans. If they have abandoned it because they think there is no chance of success, they are beyond saving. It is the same story with government-affiliated financial institutions.

Q.

Regarding the money lending business, you have said over and over again that you are not considering making a review that would involve a new legal amendment. As a reason for that, you have cited the unanimous vote of all political parties to the amendment of the Money Lending Act at that time. In the meantime, as we faced a financial crisis in the past two years, the economic environment has changed since then. Despite that, do you think it is not necessary to make a review that would involve a new legal amendment?

A.

Basically, how do you think the environment has changed in relation to this matter?

Q.

For example, a financial crisis occurred, and it dealt a blow to the export industry, etc. Thus, the basis for considering this matter changed…

A.

Although I think that the environment has changed substantially in various aspects, the situation is not such that we should review the law that was enacted based on the unanimous agreement of all political parties. However, as there are many ambiguous, unsettled issues regarding the implementation of this law, I believe we need to sort out such issues, and we are now studying what to do.

(End)