Chaos at Mizuho shows banks must go back to basics -- Akahata editorial, April 8 (excerpts)
Mizuho Bank, an integrated body of the Daiichi Kangyo Bank, Fuji Bank, and Industrial Bank of Japan began operating on April 1, and on opening day their computer system broke down.
Their automated-teller machines (ATM) all over the country either failed to operate or mal-operated with failure of entries and double entries. Reportedly, there were 2.5 million failures in the scheduled payment of public utility bills and payments for goods.
The trouble at the mega-bank Mizuho could trigger a crisis of the whole financial system.
The trouble arose possibly because the three banks have ignored the basics for the banking industry -- security in the function of settling accounts.
Most of the 150 billion yen (1.13 billion dollars) which the new bank invested after the integration was for developing speculative financial products such as derivatives, and not for integrating the vital system for settling accounts. This is the policy of changing finances into the U.S. way of playing the money game, which the Liberal Democratic Party government and business circles are aiming at under the "financial Big Bang" policy.
On April 1, Yanagisawa Hakuo, state minister in charge of financial policy, boasted that the day's lift on the complete protection of time deposits has secured the soundness of financial institutions. To the contrary, the chaos at Mizuho on the day shows that Japan's financial system is far from sound and secure.
Under the Koizumi Cabinet, the sole concern of which is increasing banks' profitability by allowing them to write off their bad loans, banks do not lend money to small- and medium-sized businesses. In spite of the almost zero interest rate on deposits, banks have withdrawn complete protection on time deposits. And the account settlement system has failed. All these examples show that the Koizumi Cabinet's financial policy and the Big Bang policy are a failure.
Today's banks must go back to the basics: protect the deposits of the people, make loans to honest businesses, and ensure the function of account settlements. (end)