Japan had hoped to convince its Group of Seven partners that it is serious about cleaning up banks' bad loans. But things could not have gotten much worse after Friday's meeting in Washington.

Finance Minister Masajuro Shiokawa's statement that Japan will do its best to solve the problem was overshadowed by his flip-flopping comments over what he had said and where he had said it.

Squabbles at home over loan-cleanup policy made it even less likely that the government would achieve its goal of solving the problem by the fiscal year ending in March 2005.

Expectations were high that Shiokawa would tell his G7 counterparts that Japan is ready to tackle the problem by taking the controversial step of injecting public funds into banks.