Newly appointed financial and postal services minister Shizuka Kamei says lenders have an obligation to help borrowers survive tough times — one reason why he’s pushing to pass a bill that would put a moratorium of about three years on loan payments for small and midsize companies.
“Normally, if borrowers are having a hard time, lenders should voluntarily help them to survive and grow so that the state doesn’t have to intervene,” Kamei said in a joint interview with media organizations Friday. “That kind of economic model is the best, but the reality is different.”
Although Kamei proposed the moratorium to help smaller companies beat the global credit crunch, some worry the move might backfire and hurt financial institutions by increasing their exposure to bad loans.
Finance Minister Hirohisa Fujii reportedly said he is unsure whether such a drastic measure is necessary at the moment. But Kamei emphasized the plan already has been agreed upon by the ruling parties and that there should be no grounds for concern when it emerges at the upcoming extraordinary Diet session.
“By forcefully making borrowers pay back loans, their managements might collapse. I think it is better to help them survive and make sure they pay back their loans,” he said.
“This is also a beneficial plan for financial institutions in the medium to long term,” Kamei said. “If many small and midsize companies went bankrupt, there would be no borrowers.”
Asked whether some financial institutions might face cash shortages because of the moratorium, Kamei said the government will pass measures to avoid such a scenario, including through the provision of public funds.
The outspoken Kamei, who is also minister in charge of postal reform, was first elected to the Diet as a member of the Liberal Democratic Party in 1979.
He served as minister of the old transport and construction ministries, and is the LDP’s former policy chief. He also had his own faction.
He left the LDP in 2005 after clashing with former Prime Minister Junichiro Koizumi over postal privatization and set up Kokumin Shinto (People’s New Party) with former Lower House Speaker Tamisuke Watanuki.
Touching on postal reform, Kokumin Shinto’s top priority, Kamei said the first step is to pass a bill to freeze an earlier plan to sell shares in and fully privatize two of the four postal firms. More specific plans will be drafted later, he said.
Japan began the 10-year process of privatizing the state-run postal services in October 2007, creating four companies to provide mail delivery, over-the-counter services, and banking and insurance operations under a holding company.