For at least the past six months, the Financial System Council, an advisory panel to Prime Minister Junichiro Koizumi, has tackled a delicate question: Is it necessary to create a system for bailing out banks "preemptively" so that the government can supply cash to lenders with potential problems? The answer is vague. A council report spells out the pros and cons, instead of offering a clear-cut conclusion.
But Mr. Tetsuya Katada, head of the subcommittee that drafted the report, has a different opinion. Speaking at a press conference the other day, he characterized the document as "setting a major trend" toward crafting a new bank bailout system. The Financial Services Agency is poised to launch a task force to work out details.
Preemptive cash infusion is a key proposal in the financial revival program -- the so-called Takenaka plan -- put together by Financial Services Minister Heizo Takenaka last autumn. The governor of the Bank of Japan, Mr. Toshihiko Fukui, has made a similar pitch, saying the government should be able to prevent a bank crisis before it is too late.