Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, August 23, 2011, from 9:25 a.m. to 9:43 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to report to you.

[Questions & Answers]

Q.

Yesterday, August 22, the application of the Guidelines of Workout for Restructuring Debt Owed by Individual Debtors started. Could you comment on that?

A.

Since the earthquake occurred, I have repeatedly faced tough questioning at Budget Committee sessions as to how to deal with the double loan problem. The double loan problem refers to cases in which small and medium-size enterprises have lost new machines and factories as a result of the disaster. Regarding the Guidelines, the double loan problem refers to cases involving individuals, mainly those who have lost houses, although some individuals are business owners. I have met with a person who lost his house four hours after it was transferred to his ownership on a 20-million-yen housing loan. How to deal with the double loan problem is critical for the restoration and reconstruction of the disaster areas. As we have repeatedly faced questioning about that, relevant ministries and agencies, under the leadership of the Chief Cabinet Secretary, have worked hard in this respect. Frankly speaking, I believe that my staff at the Financial Services Agency (FSA) has done a very good job.

The FSA has had its hands full, as have other ministries - in particular, the Ministry of Economy, Trade and Industry, has been dealing with the nuclear power station. As for the Ministry of Agriculture, Forestry and Fisheries, 20,000 fishing boats have been swept away by the tsunami and some portions of farmland have been destroyed. The Ministry of Land, Infrastructure, Transport and Tourism has faced such serious problems as the piles of rubble to be cleared and the disruptions of road transport. In particular, loans are an area of specialty for the FSA, so the FSA Commissioner instructed the FSA staff to do spadework for other ministries, working behind the scenes out of consideration for their positions.

I believe that the FSA staff has done a good job. People who do spadework behind the scenes are necessary in times like this. The application of the Guidelines of Workout for Restructuring Debt Owed by Individual Debtors started on August 22, as was pointed out. From the perspective of promoting support for the application of the Guidelines, the government will subsidize fees paid to lawyers who help disaster-stricken debtors use the service of the Management Committee of Individual Debtor Guidelines for Out-of-Court Workouts, a third-party committee. There are about 300 lawyers willing to cooperate with the management of the guideline. I hear that usually, such lawyer service costs 290,000 yen per lawyer. As this is a service related to post-disaster restoration work that serves public interests, I hear that the fee has been discounted to around 100,000 yen. Even so, lawyer fees are necessary, so the government will subsidize the payment of lawyer fees and fees paid to administrative staff and certified public accountants cooperating with the management of the guideline, and the government provides support to efforts to raise awareness about this guideline through public relations (PR) activities.

I hope that the Guidelines will facilitate smooth debt workouts and help disaster victims make a fresh start toward reconstruction.

Q.

In relation to that, there were around 180 requests for consultation on the first day according to the third-party organization. What do you think of that number compared with the number of people assumed to be eligible for the application of the guideline? Another issue is awareness of the guideline. How much awareness do you think there is?

A.

That is a very poignant question. Yesterday, the Management Committee opened a free-of-charge call center. It has the head office in Tokyo and branches in Aomori, Iwate, Miyagi, Fukushima and Ibaraki Prefectures. I hear that on the first day, the free-of-charge call center received 109 calls requesting consultation, and in Miyagi Prefecture, which has the largest population among those prefectures, there were 44 requests for consultation. I have been told that in total, there were around 180 - 176, to be precise - requests for consultation.

In Miyagi Prefecture, the consultation service started at 9 a.m. Although the telephone lines were busy at first, the congestion was resolved soon. Meanwhile, 77 Bank received several inquiries and Sendai Bank received none. In any case, we will carefully monitor future developments.

As to how many debtors are eligible for the application of the guideline, we estimate that roughly 10,000 to 20,000 people will apply for it. According to hearings conducted by the end of May with financial institutions in the three disaster-stricken prefectures - Iwate, Miyagi and Fukushima - there are an estimated 18,000 or so debtors who have suspended the repayment of contracted loans. To estimate the cost of fee payments to lawyers, we need a rough estimate of the number of people eligible for the application of the guideline. We assume that roughly 10,000 to 20,000 people are eligible.

It is also very important to ensure awareness about the guideline, so I have issued a strong instruction in this respect. As TV has significant influence, we would like TV programs to take up matters like this. During the 26 years of my tenure as a Diet member, I have experienced cases where even very important matters remain unknown. The government has tried hard to raise awareness through newspaper ads and fliers, and is continuing the effort. We are now considering using spot TV ads.

I hope that you will write articles about this matter to raise awareness. If debtors declare voluntary bankruptcy, they will be blacklisted and lose many rights, as you know. This guideline aims to provide relief in that respect. In that sense, this is a relief measure that serves public interests, so I will appreciate your advice and support.

Q.

There have been complaints that the criteria for the application of the Guidelines of Workout for Restructuring Debt Owed by Individual Debtors are difficult to understand. What is your response to such complaints?

A.

In response to such complaints, I have instructed that PR about the Guidelines of Workout for Restructuring Debt Owed by Individual Debtors be made through as easy-to-understand TV ads as possible - maybe we should seek your advice in this respect.

As you know well, if we leave it to bureaucrats to do PR, they tend to try to provide all-inclusive explanations as they worry about the risk of problems arising from failure to mention everything possible. PR professionals highlight only the key points. When we see ads, we pay attention only to the key points. It has traditionally been a problem that government PR attracts little attention. To put it simply, the essence of administration is different from the essence of PR in that from the perspective of administration, a selective approach used in PR may entail problems. I will take responsibility in that respect. The important thing to do is to raise awareness with clear explanations and encourage people to seek consultation. As many people are facing hardship, we are considering how to reach out to their hearts through user-friendly PR. We will appreciate advice from you media people.

Thank you very much.

(End)