Japan Press Weekly

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2011 May 18 - 24 TOP3 [GREAT EAST JAPAN DISASTER]

Can loan shark money save disaster victims?

Editorial (excerpts)

The Financial Services Agency on April 28 carried out a sudden deregulation, based on a Cabinet Office order, to allow money-lending businesses in the East Japan Disaster-hit area to give illegally excessive loans.

Ostensibly referring to the need for quick money in the disaster area, the agency says, “If funds for loans are available, inconveniences in borrowing money will be removed.”

However, loans and credit from consumer credit businesses are by no means charities. These credit companies charge high annual interest rates at nearly 20% even from disaster victims.

In the first place, the regulation on the total amount of loans one can receive annually was finally introduced in June 2010 after lengthy discussions on ways to prevent multiple debts causing many tragedies.

A national volunteer organization to rescue victims of consumer credits and loans protested at the deregulation, describing it as “a stupid plan of possibly driving disaster victims into multiple debts.”

Since the enactment of the regulation on consumer loans, credit companies are having increasing difficulties conducting their businesses. The industry is making various moves to buy political influence.

It was the Democratic Party of Japan that firstly suggested deregulation on loans in the disaster-hit area (April 1). The money-lending business association responded to the DPJ suggestion and made representations to the Financial Services Agency on April 14 for deregulation. The FSA omitted the procedure of inviting public opinion, which is usually a requirement, in order to swiftly implement the Cabinet Office order.

The real need in the disaster-hit area is an immediate distribution of the donations collected from across the country and an increase in aid money based on the law for assisting reconstruction of victims’ livelihoods.

The need also includes proper assistance measures, such as the exemption of and freeze on debts by accurately grasping the situation of disaster victims suffering from “dual and triple” loans, and an offer of interest-free loans, an interest subsidy, and other institutionalized loans.