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While upholding the government’s readiness to compromise with the opposition, Finance Minister Kiichi Miyazawa refused to accept Tuesday the idea of setting up independent authorities to supervise the liquidation of failed financial institutions.

During a morning session of the Lower House special committee on financial stabilization, Motohisa Furukawa of the opposition Democratic Party of Japan insisted that a “financial resuscitation committee” should be formed as an independent body separate from the influence of the Finance Ministry.

“What we have today is not a simple financial crisis but one combined with a credibility crisis,” he said, pointing to the lack of public confidence in the Finance Ministry. “What is most important is to restore public confidence,” he said. “The creation of an independent committee is indispensable to achieve that end and we must implement a scheme that would put a failed bank under state control.”

Miyazawa, however, responded negatively to the idea, noting that state control over a failed bank does not provide an answer to today’s problems. The finance chief also voiced concerns that such a move would go against the principles of market economics.

Meanwhile, Hakuo Yanagisawa, chief of the National Land Agency, sought understanding for the government’s plan to create a public institution to untangle multiple claims on collateralized real estate which is behind problem loans.

Opposition parties have been criticizing the government’s scheme, which they regard as an effective “benevolent ordinance” aimed at relieving general contractors of their mounting debts. “A benevolent ordinance, as I understand it, is one which authorities exercise to force creditors to give up their claims,” Yanagisawa said. “But under what we’re proposing here, the disclaimer will be made based on creditors’ consensus,” he said.

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