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The policy affairs chiefs of the three opposition parties failed to agree Wednesday on a basic policy to deal with failing banks, stumbling over whether to allow all insolvent banks to go under.

The three parties are seeking to jointly draw up bills to stabilize the nation’s financial system as a counterproposal to those already submitted to the Diet by the government and Liberal Democratic Party.

While the Democratic Party of Japan and Shinto Heiwa (New Peace Party) stress that major banks should be put under state control when they fail to mitigate the impact on the financial system, the Liberal Party wants all insolvent banks to be subject to liquidation.

The difference on this fundamental point reflects the challenge the parties are facing to act jointly. They are scheduled to meet Tuesday to discuss the issue again.

Earlier, the parties had reached basic agreement on a basic plan to deal with failed banks. The agreement includes setting up a quasi-judicial body independent of the Finance Ministry that addresses financial failures as well as a powerful body, similar to the U.S. Resolution Trust Corp., to collect nonperforming loans from financial institutions.

The RTC was set up by the U.S. Federal Deposit Insurance Corp. under a 1987 law to take over the assets and liabilities of collapsing savings and loan institutions.

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