To win opposition support for Diet passage of government-proposed financial system stabilization bills, the ruling Liberal Democratic Party on Wednesday came up with a set of compromise proposals, including a plan to allow the government to purchase all shares of failed banks and bring them under state control.

The compromise was presented to opposition parties during a meeting of directors of the House of Representatives Committee on banking system problems to set the stage for full-scale negotiations to revise the bills to reform the nation’s ailing banking system.

The opposition side rejected the LDP plan as “unacceptable,” but the committee directors from both sides agreed to meet again this afternoon to continue talks to revise the bills.

Although the LDP’s proposals take into account opposition camp proposals, negotiations are expected to continue as the LDP continues to refuse opposition demands calling for the creation of an independent body to deal with bank failures.

The LDP also continues to rule out abolishing a current law that allows the infusion of taxpayer money into banks to beef up their capital bases.

Motohisa Ikeda of the Democratic Party of Japan, the largest opposition party, and a participant in the negotiations, said the LDP proposal was “only partial and not comprehensive.”

The LDP, which is far short of a majority in the Upper House, needs the support of the opposition camp to win Diet endorsement of the financial bills — the biggest issue for Prime Minister Keizo Obuchi’s administration during the current extraordinary Diet session.

The LDP’s five-point proposal includes assigning a Cabinet minister to head the Financial Supervisory Agency to oversee reconstruction of the financial system; allowing the government to buy all the shares of a failed bank and bring it under state control; and shortening the time span for reorganizing failed banks from up to five years to not more than three years.

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