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Bank recapitalization bill debated at upper house+
(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, Nov. 7_(Kyodo) _ The House of Councillors began deliberations Friday on a bill to recapitalize financial institutions with public funds, after it cleared the more powerful lower house Thursday.
The recapitalization bill would amend the Act on Special Measures for Strengthening Financial Functions so that the government can accept banks' applications for public funds until the end of March 2012, instead of March this year as stipulated in the present law.
The amendment is being proposed as an emergency measure in response to the global financial turmoil, which is feared to erode the capital bases of financial institutions and make them reluctant to lend.
In line with a request from the main opposition Democratic Party of Japan, the bill has been modified in the lower house so as to include a provision that requires banks to clarify management responsibility if they receive public funds after their financial standing deteriorates for reasons other than the current financial crisis.
The bill would also qualify Norinchukin Bank, the de facto central bank for Japan's farm and fisheries cooperatives, and Shinginko Tokyo, a bank primarily owned by the Tokyo metropolitan government, to receive public capital.
Financial Services Minister Shoichi Nakagawa, seeking the opposition's support for including the two banks in the list of financial institutions covered by the bill, told a plenary session of the upper house, "We will judge the appropriateness of recapitalizing them after strictly inspecting them from the standpoint of profitability and facilitation of fund-raising by small and midsize companies."
The DPJ says it is planning to get the bill revised again by incorporating a clause to make it a prerequisite to get advance parliamentary approval if the government is to recapitalize Norinchukin Bank.
The gulf between the ruling coalition of the Liberal Democratic Party and New Komeito party and the opposition camp over the bill may delay a vote on it in the upper house to around the end of the current extraordinary Diet session on Nov. 30, lawmakers said.
The upper house also began debate Friday on a bill to revise the Insurance Business Law so that the government can provide public aid to policyholders of bankrupt life insurers until the end of March 2012, beyond the end of March next year when the current scheme for such aid expires.
Meanwhile, Prime Minister Taro Aso reiterated his recent remarks regarding the politically sensitive issue of raising the consumption tax rate.
"I have consistently stated that the government would like to ask for a hike in three years, depending on economic conditions," the premier said.
Last week, Aso indicated his willingness to raise the sales tax rate from the current 5 percent in three years to cover ballooning social security costs. The government and the ruling parties are set to work out a medium-term tax reform program, including a sales tax hike, by late December.
Copyright ? 2008 Kyodo News International, Inc.
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