Press Conference by Shizuka Kamei,
Minister for Financial Services

(Excerpt)

(Tuesday, April 20, 2010, from 9:39 to 9:52)

Minister's Comments

(* Press conference held in succession to the joint press conference on postal reform with Minister for Internal Affairs and Communications Kazuhiro Haraguchi)

Let me talk about the enforcement of the revised Money Lending Act.

The policy for its "full" enforcement was reported and approved at the Cabinet meeting today. The Act will be put into force in its entirety.

The Money Lending Act Project Team had been conducting studies to enforce the Act, as to what kind of consideration should be given upon implementing the Act in order to prevent borrowers from falling into distress, especially given the fact that there is a demand for funding among borrowers. The final decision on the Act was made at this juncture in a form that resolves such issue in implementing the Act from the borrowers' standpoint, while clarifying the "grey zones", where legal and regulatory interpretation upon implementing the Act had been somewhat unclear all this time.

The specifics for the future may be explained later by Senior Vice Minister Kouhei Ohtsuka, who is here with us today. In a sense, it attracted a great deal of public attention, so it was brought about by extremely careful discussions we continuously held with the three ruling parties, including the Policy Meetings.

Let me also add that following the amendment of the Insurance Business Act in 2005, some mutual aid businesses (Kyosai) operated by small entities have become legally unsustainable on an extremely wide scale across Japan. This situation cannot be left untouched. Considering real-life examples of certain people amassing personal fortunes, such as the Orange Mutual Aid Association scandal years ago, and cases in which policyholders and subscribers were put at a disadvantage due to opaque management etc., we will submit a bill, in the current session of the Diet, to take measures that will prevent such incidents from arising while making sound mutual-aid businesses including those operated by small entities legally sustainable in their original form, in which everyone helps each other out.

One of the keys here is to make small entities attain corporate status; we cannot take such simple measures as allowing them to continue their businesses while maintaining voluntary association status, as their work involves handling other people's money... we are working on a bill that will enable them to continue their businesses, with the assumption that these legal entities will be supervised by their respective supervisory authorities... Let me also take this opportunity to report to you that the preparation of this bill is in its final stages.

I have nothing further to report today. If you have any questions, Senior Vice Minister Kouhei Ohtsuka and Parliamentary Secretary Kenji Tamura, both of whom played a central role on this matter, will provide you with an explanation.

[Questions and Answers]

Q.

I have one question regarding the decision to fully enforce the Money Lending Act on June 18: what aspects do you intend to pay most attention to?

A.

Haven't you been listening to me? I have already discussed this.

The fact that there is a demand for funding means, in a sense, that many people are in hardship due to such high interest rates and for being heavily indebted, but at the same time, it is also true that some people are only receiving loans in small amounts for emergencies. How could we prevent these people from becoming insolvent as a result of the full enforcement of the Act on June 18? This is a tough question.

In this context, one aspect of the demand for funding is that for sole proprietors who manage their own businesses, it was unreasonable-or put differently, unrealistic- to restrict the total amount of credit that can be provided to him/her by all money lenders on an aggregate basis to such an extent. In that sense, one of the major ideas was to determine a way for sole proprietors to be able to obtain such emergency loans even under the full enforcement of the Act. At the same time, we have sorted out and sort out various "grey zones" in the implementation of the Act... In a sense, our major focus was on determining a way to make it easier for borrowers to borrow money, without making households and businesses insolvent as a result of excess borrowings.

Q.

Will the Cabinet decision on the bill for revising the Insurance Business Act be made by the end of the month? In relation to supervisory authorities, the Financial Services Agency (FSA) has expressed its view that the task of supervising the entities should be left to their respective current supervisory authorities, but some of the other government ministries and agencies are of the opinion that such task should be performed by the FSA... Does this view remain unchanged, in that the task should be performed by the current supervisory authorities?

A.

At the primary level, yes. As you know, there is an enormous number of entities. The FSA is not such an almighty agency. Primary supervision should be done by them. At the primary level, that is. Overall, however, the FSA is responsible for financial, securities [and the insurance-like mutual aid business], as a matter of course.

Q.

Will the Cabinet decision be made in May, or some time in April?

A.

At the current pace, it might be pushed back into May. It is the matter of priorities for submitting bills by the Cabinet. With that in mind, we are working to pass the bill at the current Diet session, so your cooperation will be appreciated again in this regard.

(End)