Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, June 11, 2010, from 7:31 p.m. to 8:09 p.m.)

[Opening Remarks by Minister Jimi]

I am Shozaburo Jimi, member of the House of Councilors and the People's New Party, appointed today to the Minister of State for Special Missions, namely, Minister of State for Financial Services and Postal Reform.

As you know, former Minister Shizuka Kamei expressed his extremely strong intention to resign from Minister yesterday. All members of the Diet belonging to the People's New Party, although small in number, urged him to continue serving as Minister. This morning, at around 1:00a.m, Prime Minister Naoto Kan made a phone call to Mr. Kamei, and later to me. Then, as secretary-general of the People's New Party, I asked Mr. Kan to persuade Mr. Kamei to stay in office on the grounds that he had intended to continue serving as the leader of the People's New Party and should therefore continue serving as Cabinet Minister as well. Mr. Kamei did not change his mind despite Mr. Kan's efforts to persuade him. Accordingly, I succeeded to Mr. Kamei's position and accepted the appointment to the Minister of State for Financial Services and Postal Reform. (Omitted)

While I am not an expert in finance, I am aware that the global economy has drastically changed in some ways since the Lehman Brothers shockwave, and that each country truly has its own problems. Over the past three decades, especially since the collapse of the Soviet Union, the United States has been extremely powerful in economic, political and military terms as the single most dominant country, and my understanding is that so-called financial capital has played a central role. I believe the Lehman Brothers shockwave was a major turning point for American-style finance-oriented capitalism, leaving it no alternative but to undergo transformation. As you are well aware, the financial capital had the political backup of former U.S. Republican President George W. Bush. Nevertheless, even the United States had its President changed to Barack Obama. If you take a look around the world, events like the Greek shock are making newspapers headlines nowadays. In that sense, economic policies including financial regulation and supervision are currently at a major juncture on an international scale. I believe there are three missions assigned by the people to the Financial Services Agency (FSA): to stabilize the financial system; to protect users of financial services and improve the convenience of such services; and to establish fair and transparent markets. As we are living in such an age where extremely dramatic changes are taking place, I am all the more committed to properly fulfilling these tasks while also seeking your opinions.

[Questions & Answers]

Q.

Today, the Metropolitan Police Department raided the Incubator Bank of Japan (Nihon Shinko Ginko), whose main business is about small-and medium-sized enterprise (SME) finance. It had been ordered to suspend part of its operations due to such problems as evading inspection, and the FSA filed criminal charges today against the bank. What are your thoughts on this situation as the Minister in charge of finance?

A.

The task of supervising financial institutions is extremely important for the FSA. I have been informed that the evasion of inspection by the Incubator Bank of Japan was revealed in concrete terms as a result of financial inspection conducted by the FSA that spanned almost a year, which led not only to administrative guidance and administrative action but also to criminal charges on the grounds that the Bank had violated the Banking Law-I am no expert in criminal law, but such evasion deserves to be criminally charged. The administrative staff will provide you with more details later on.

In any case, banks are in one sense public entities under the Banking Law. As finance is the "lifeblood of the economy", it is necessary foe us to execute fair and just regulatory enforcement, supervision and guidance.

Q.

I am Sonoda from Hokenmainichi Shimbun.

With the conclusion of the current Diet session, it appears that the work done to amend the Insurance Business Law in relation to mutual aid enterprises will be back to square one. Please share your thoughts on this matter with us.

A.

From what I have been told by the administrative staff, the decision was made today to continue deliberating the bill in the next Diet session. Taking the Japan Mountaineering Association as an example, there are people who love climbing mountains, but not many. However, if there is an accident and anyone goes missing in the mountains, rescue operations will be extremely costly. Such costs are not easy to absorb for general mutual aid enterprises, and there are a number of examples of this kind. There are similar examples relating to healthcare professionals as well. It is often said that people climb a mountain because it is there; I think mountain climbing is a great activity and a wonderful sport. The Japan Mountaineering Association was formed voluntarily by like-minded people who share such a view to disperse risks among themselves. Japan has a long tradition and history of people helping each other out, so if the current Insurance Business Law is applied even to these types of associations, it would be very difficult for such mutual aid enterprises to survive.

Naturally, lower risks means lower insurance premium rates for them, whereas higher risks translate into extremely high insurance premium rates. My understanding of this bill is that it seeks to approve entities whose presence is very valuable in cultural or social terms, even though they are not necessarily feasible as general insurance businesses. Certainly, a single global standard is necessary in some aspects. However, my view at this point in time is that it is also important to have finely-tuned standards and laws that are tailored to the actual circumstances of each country and region.

Q.

The Act concerning Temporary Measures to Facilitate Financing for SMEs, etc. endorsed by former Minister Shizuka Kamei is a temporary legislation that is due to expire on March 31, 2011. Many people seem to be making use of repayment postponement under the Law. What are your views on extending the expiry of the Law?

A.

This will be considered in the future. As you are aware, former Minister Shizuka Kamei was extremely enthusiastic about this bill. I was just told by the administrative staff that the Law has been fairly effective. The agreement reached among the three ruling parties last September clearly states their commitment to properly rectify credit withdrawal and credit crunch especially with respect to SMEs in times of recession like this. As the bill for facilitating SME finance was put together with this in mind, we will properly give positive consideration to this matter.

Q.

Does it mean the expiry of the Law will be extended somewhat, rather than letting it expire next March?

A.

To be honest, I have yet to study to such depth, so I intend to conduct studies thoroughly including addressing this matter.

(End)