The ruling Liberal Democratic Party said Thursday that the banking community, to regain public trust, must step up efforts to restructure and cut costs through such means as pay cuts.
The calls came during the day's session of an LDP panel currently studying measures to stabilize the financial system, where representatives of the Japan Federation of Bankers Associations were summoned for a hearing. According to participants, the LDP lawmakers, who are prepared to release next week a package of steps aimed at securing deposits and investments through public funds, said further restructuring of the industry is needed.
The demands, including one that says decisions over winter bonuses should "bear in mind the general public sentiment" over the finance industry, were apparently meant to warn of taxpayer disapproval of using public money to help the financial industry without painful concessions from banks themselves. Legislators and financial authorities remain haunted by last year's public furor over a scheme to dissolve the seven failed "jusen" housing loan companies with the help of 685 billion yen in taxpayer money.
The general view among the public is that banks still continue to pay out higher salaries than other industries even though most are shouldered with nonperforming assets, and that more steps should be taken to reduce costs before any public help is offered. Meanwhile, the banking industry indicated to the panel that it would support the use of public funds to dispel fears over the strength of the financial system, saying such schemes would help maintain stability in the general economy.