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Hakuo Yanagisawa, minister in charge of financial affairs, indicated Tuesday that it will be difficult to propose legislation to establish a new government body to buy banks’ shareholdings during the current Diet session.

Yanagisawa said during a news conference that the Financial Services Agency is of the same opinion as Taku Yamasaki, secretary general of the Liberal Democratic Party, who said Monday that the legislation would not be in time for the current Diet session, which runs through late June.

Chief Cabinet Secretary Yasuo Fukuda said separately that enough time should be secured for Diet discussion of the proposal, noting that a hastily crafted measure would not be able to gain the trust of financial markets.

On Monday, Yamasaki said, “It’s impossible to process (the proposal) during the current Diet session because the government has not worked out the necessary bills.”

The proposal for the government-backed, share-purchasing body was part of a package of emergency economic measures the government adopted April 6 to reassure the markets that it was doing something about the faltering economy.

The proposed body would help absorb high levels of stockholdings Japanese banks hold in other businesses. Much of these holdings will have to be sold because the package calls for banks to limit the value of their total stockholdings to the level of their capital.

The package, however, did not specify how soon the body would be created.

Shizuka Kamei, who was LDP policy chief at the time, pushed for creating the body during the current Diet session to protect banks from fluctuations in stock prices.

But LDP policy chief Taro Aso confirmed Monday that the party will not try to pass the required legislation during the present session.

Some LDP lawmakers and government officials are opposed to creating the body so soon because it would require government spending, and party sources say the latest decision was made in light of Prime Minister Junichiro Koizumi’s drive to curb spending.

The party will decide by May 25 which measures in the package it should present during the current session, Yamasaki said.

“We intend to process as many measures as possible, other than the share-purchase body,” he said.

The package consists of five policy fields: industrial revitalization and reconstruction of the nation’s financial system, stock market reform, urban redevelopment, job creation, and tax reform.

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