Taxpayer money should be made available to rescue depositors if financial institutions fail, the head of the nation’s regional banks said Feb. 12.

Takashi Tamaki, chairman of the Regional Banks Association of Japan, told a news conference that he personally believes public funds should be utilized if necessary in a financial crisis. But such funds should be used to help depositors, not to help banks get rid of their nonperforming loans, he said.

Tamaki, who is also president of Chiba Bank, pointed out that with the planned implementation of sweeping financial system reforms by 2001, some financial institutions will be unable to escape bankruptcy. “In such a situation, there are only two ways to handle the problem — the use of funds from the Deposit Insurance Corp. and the infusion of tax money,” he said.

While the DIC is the only mechanism available at the moment, authorities should devise a scheme under which public funds could be used to protect depositors at a failed financial institution, according to Tamaki. In recent weeks, calls for such use of public funds have sprung up among some lawmakers as bank stocks continue to plummet.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.