Public funds for bank get mixed reaction from political parties

The government on May 17 decided to put two trillion yen of public funds into Resona Holdings Inc., one of Japan's major financial groups, to help it financially survive. Resona is financially troubled due to a capital shortfall.

Resona will be Japan's first financial group to be placed under state control to receive special government support. Asked by the government to carry out sweeping cost cutting restructuring to rebuild itself, Resona will cut its workforce and the number of its subsidiaries.

Japanese Communist Party Secretariat Head Ichida Tadayoshi issued a statement on the same day saying that the Koizumi Cabinet's financial policy is to blame for the Resona group's financial crisis.

Ichida said: "The Koizumi Cabinet has taken no steps to help improve the actual economy. On the contrary, it has pushed ahead with the so-called Takenaka Program focusing on accelerating the disposal of bad loans held by banks, putting the Japanese economy in a deep and new crisis as represented by stock falls, the zero-economic growth rate, and cuts in personal incomes."

Ichida demanded that the government immediately revoke Economic and Financial Minister Takenaka Heizo's "program". He said this program has only forced banks to evaluate the assets of debtor companies in disregard of Japan's real economic situation, made them more reluctant to lend money to small- and medium-sized companies, and further weakened the economy.

On NHK's political debate program aired on May 18, the three ruling coalition parties insisted that the government's decision to use tax money for preventing Resona from going bankrupt was appropriate, while admitting that the JCP was right in calling for the rebuilding of the actual economy. (end)