The Financial Reconstruction Commission is to consider whether it can disclose the numerical data that led to the government’s decision to forgive loans to troubled department store chain Sogo Co., the newly appointed FRC chairman said.

The appointment of Kimitaka Kuze as financial reconstruction minister comes amid controversy over the commission’s recent decision to approve the government buyback of 200 billion yen in outstanding loans, originally extended by the Long-Term Credit Bank of Japan to Sogo.

The LTCB, which failed under massive bad loans in late 1998, was purchased by a group of investors led by U.S.-based Ripplewood Holdings LLC. It was renamed Shinsei Bank on June 5.

The government decided last week to purchase the loans at book value from Shinsei and to waive 97 billion yen of that amount, in cooperation with Sogo’s restructuring plan to have 630 billion yen of its debts forgiven by 73 creditor banks.

The move, which the officials explained as “an exception among exceptions” and the best option to minimize the cost to the public, has attracted criticism from Liberal Democratic Party members, other opposition parties and private economists who question the propriety of forcing taxpayers to prop up a failing private enterprise.

The government has said that waiving part of Sogo’s huge debt — instead of having the company liquidated — makes the best economic sense, yet it has been unable to cite specific figures to back up the claim.

Kuze acknowledged that the government’s decision has not gained enough public understanding, adding that he will consider releasing a loan recovery scenario compiled by the Industrial Bank of Japan, Sogo’s main bank.

“It is true that the issue surrounding Sogo is very difficult for the public to understand,” he said. “I find it my responsibility to explain (the government’s position) in a way the public will understand.”

Commenting on public calls for the government to take firmer action to clarify Sogo’s responsibility for the financial debacle, Kuze said he will again ask the group’s former chairman, Hiroo Mizushima, who is considered by many to be one of those responsible for the failure, to turn over his personal assets. But Kuze indicated that he is reluctant to file a damages suit against Sogo’s former management, saying that such legal action would be time-consuming.

Kuze also said it would be “too early” for the Bank of Japan to end its “zero-interest-rate” policy — which is widely expected to be abandoned soon — at its next Policy Board meeting on July 17.

The BOJ, which has kept the key short-term interest rate at near zero since February 1999, seems to be seeking the most opportune moment to abandon the policy. Market participants predict that, with the upbeat results of the BOJ’s “tankan” business confidence survey for June, released Tuesday, the central bank could decide on a rate hike as early as this month.

Kuze said that, while the tankan results showed a strong upturn in firms’ capital spending and earnings projections, the survey by itself has not shown whether consumption and income levels are picking up. More positive data in such areas are needed to determine whether the economy is on a solid recovery track sustained by private demand, he said.

“I believe that a more positive indication on consumption is needed,” Kuze said. “I believe (the abandonment of the policy on July 17) is too early.”

Kuze, a former top official at the Home Affairs Ministry, is an expert on local autonomy. The veteran Upper House member, however, has little background in financial affairs and was only notified of his appointment to the FRC’s top post on Tuesday, the very day of the Cabinet reshuffle.