Japan Press Weekly

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2008 October 29 - November 4 [FINANCE]

JCP Sasaki says finance bill fails to improve availability of loans to smaller firms

Japanese Communist Party Sasaki Kensho on October 28 said that a government-proposed finance bill to prop up financial institutions is a measure that would only discourage banks from lending money to small- and midsized enterprises (SMEs).

The House of Representatives began discussing the bill at its plenary session on the same day. The bill is intended to inject tax money into financial institutions ostensibly as a means of ending banks’ reluctance to lend money to SMEs.

Sasaki said that if tax money is injected into the banks as proposed, the money will only be used to make up for losses they incur due to the global financial crisis that began in the United States.

He went on to say, “The existing law clearly states that financial institutions should be held responsible for their failure to lend money to SMEs. But the proposed new law deletes the clause.”

Sasaki criticized the bill’s failure to “require the financial institutions to set goals or to call their responsibility into question, further neglecting to provide financial support to SMEs.”

While pointing out that the head of the Federation of Bankers Associations of Japan stated, “We do not feel we are being reluctant to lend money to SMEs,” Sasaki also criticized the finance minister for failing to do anything to end such reluctance on the part of banks. “It is tantamount to allowing the banks to continue to not provide funds to smaller firms,” he said.

Sasaki said, “The need now is for the government to stop banks from being reluctant to issue new loans to SMEs and their practice of conducting forcible debt collection.”

He also said that many small businesses can no longer obtain loans because the credit-guarantee program no longer guarantees the full amount of loans. Sasaki demanded that the program be immediately restored to the status quo ante to guarantee the full loan amounts.

Prime Minister Aso Taro rejected the request.

Sasaki said that the government should review its financial policy that models itself on the model of U.S. financial liberalization, and improve the public finance system.