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Japan’s economic policy is adrift, as the government keeps putting off action to clean up debt-burdened banks and prop up the flagging economy. Mr. Heizo Takenaka, the chief banking regulator, wants to speed up the write-off of banks’ nonperforming loans, but the release of his much-heralded action plan has been postponed until the end of this month under pressure from the Liberal Democratic Party and the banking community. A decision on an economic package designed to absorb the shock of debt disposal has also been delayed.

All of this is regrettable. The urgent task for the government is to complete an integrated game plan to rescue the banking system and revive the economy. The continuing policy drift will only make things worse, possibly leading to political turmoil as well. A combination of economic unrest and political instability is a recipe for social agitation.

That is why Prime Minister Junichiro Koizumi must exercise leadership up front and ensure that policy is speedily implemented. He is sticking, rightly, to his “no reform, no recovery” slogan but is leaving everything to Mr. Takenaka, an academic with few political friends. The embattled financial services minister now needs active support from the prime minister.

The Takenaka blueprint has come under attack for two reasons. First, it envisions a “hard landing” — a cash infusion into capital-short banks, a measure that could put one or more of them under government control. Second, it has been worked out without customary coordination with the LDP.

The Takenaka strategy boils down to assessing loans more accurately. For that, he relies on a U.S. method known as “cash discount flow,” a radical departure from the lenient practice of the past that has tended to retard or limit write-offs. As a result, bad loans would increase temporarily, forcing banks to put up more loan-loss reserves. If they fell short of capital, the government would supply cash and, if necessary, put them under its care. Top managers of such banks would have to resign their posts as an expression of responsibility.

This banking reform plan also targets an accounting rule that has been criticized as a trick for “padding” capital. The rule lets banks count as part of their capital a large amount of future tax credits for loan-loss provisions. If Mr. Takenaka has his way, the weight of such anticipated tax refunds would be drastically reduced. As a result, the capital-to-asset ratio at some major banks could drop below the minimum 8 percent required for international banking, leaving them with little choice but to accept government aid.

As expected, top banks have balked at the Takenaka plan. In a joint statement issued on Friday, they said they would not accept the proposal to change the tax-refund calculation method. They also made it clear that they would reject demands for a management shakeup even if they received public assistance. The LDP and its coalition partners, while calling for a cash infusion, have also objected to the rule change.

One thing is clear beyond all doubt: The bad-loan problem cannot be postponed any further. Makeshift measures will only aggravate the mess, as evidenced amply by past experience. Hard-hitting measures, perhaps including a government bailout, are needed to clean up the mess once and for all. One way or another, bankers will have to accept responsibility. The Takenaka plan is not perfect. There may be some technical details to be ironed out, but its basic principles — strict accounting of bad loans and the shoring up of bank capital, if necessary, through cash provisions — should be maintained.

However, Mr. Takenaka and his task force of private specialists should avoid unnecessary friction with politicians. Members of the ruling parties are understandably angry that they have been left completely out of the loop. Some have even demanded his resignation. Opposition parties have introduced a censure motion against him.

After all, this is Japan. Nothing can get done without an effort to foster consensus. Even though Prime Minister Koizumi favors the top-down approach, a certain amount of coordination with the governing parties is essential. Mr. Takenaka and his team seem to have gone a bit too far in bypassing the usual route of prior consultation.

Mr. Koizumi, who gave Mr. Takenaka two economic posts in last month’s Cabinet reshuffle, bears heavy responsibility for steering the economy in the right direction. An extra budget is now considered necessary not only to ease the impact of deflation but also to close a widening revenue gap. But the prime minister, apparently overeager to keep his commitment to spending restraint, remains silent on this pressing issue.

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