The new bank recapitalization bill is expected to be enacted today on the last day of the current Diet session.The bill, which cleared the Lower House Tuesday, is expected to be approved by the Upper House's plenary session this afternoon.At the same time, the chamber's plenary session will also approve the second supplementary budget for fiscal 1998, which includes government guarantees worth 43 trillion yen to finance the new recapitalization scheme.The bank recapitalization bill, drafted by the ruling Liberal Democratic Party and revised based on proposals from elements of the opposition camp, sets stringent requirements on banks hoping to receive public funds, including a mandate that those banks disclose information and publicize the progress of their restructuring.With the new legislation, the government will be able to inject public funds into financial institutions with extremely thin capital bases by purchasing their common shares. In approving any capital injection, regulatory authorities will demand drastic restructuring and require that management be dismissed.Other financial reform laws, one of which will grant some authority to a five-member financial-resuscitation committee, were approved earlier by the Diet.Following the enactment of those laws, the Long-term Credit Bank of Japan is expected to apply for a capital injection.
