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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: S.C. Barnard who wrote (4161)	9/18/1998 7:48:00 AM
From: TokyoMex	Read Replies (1) \| Respond to of 119973

A step in right direction ... Friday September 18, 6:45 am Eastern Time FOCUS-Japan parties clinch banking cleanup deal (Recasts lead, updates with new quotes) By William Mallard TOKYO, Sept 18 (Reuters) - Japan's ruling party and key opposition blocs on Friday clinched a hard-fought deal to fix the nation's ailing banking sector and put one of its largest banks under temporary government control. The deal hands Prime Minister Keizo Obuchi a much-needed victory to take to his U.S. summit next Tuesday. Naoto Kan, head of the main opposition Democratic Party, said after meeting Obuchi that his party and the ruling Liberal Democratic Party (LDP) had reached a ''basic agreement'' and his counterpart from the Buddhist-backed New Peace Party later said the same. A third opposition party, the Liberals, held out for further talks to press tougher demands, but passage of enabling legislation would not require its support. The deal includes placing the troubled Long-Term Credit Bank of Japan (LTCB) under state control and abandoning an LDP plan to use a bank recapitalisation fund to inject taxpayers' money into LTCB. The LDP also made a major concession to opposition demands by agreeing to strip the Finance Ministry of its financial policy powers by the end of the next parliament session, probably in June 1999. The deal came after days of gruelling talks by party officials seeking to narrow the gap between the opposition's tough approach to the banking cleanup and the ruling party's original plan that included using taxpayers' money to smooth mergers of banks deemed too big to fail. Obuchi said his decision to accept many of the opposition demands was based on ''my strong determination that no matter what, Japan must not cause a financial recession'' in other countries. The feisty opposition have pried major concessions from the LDP, which was eager not only to give Obuchi some agreement to show U.S. President Bill Clinton but also to avoid a parliamentary deadlock that could trigger snap elections for the powerful Lower House. The United States has pushed Japan hard to act quickly to boost its recession-mired economy and fix its shaky banking system. But fearing the systemic risk of a major bank's collapse, Washington has recently urged the hefty use of public funds for ''weak but viable banks.'' The two key sticking points in the talks had been whether and how to nationalise the ailing LTCB and whether to agree to opposition demands to strip the Finance Ministry of its policy-making powers and give them to a new independent commission that would also oversee the banking cleanup. The ruling party, which lacks a majority in parliament's Upper House, was forced to bring its banking scheme into line with more stringent opposition demands that would immediately nationalise failed banks, force shareholders of troubled banks to take a harder hit and shorten the time needed for financial system consolidation. It was not immediately clear how the deal would handle the question of whether and when to use public money to bolster undercapitalised banks. That is a point of concern to some experts who say leeway is needed for such steps to keep big bank failures from sparking systemic risk for the entire financial system. Financial analysts said that despite the new framework, authorities would have a tough time restoring confidence in their ability to implement the scheme. Drafting the legislation and revising related laws could also be a mammoth task, although some domestic media said the new bills were expected to pass parliament this month. Jittery financial market players are also likely to reserve final judgment until they see details of the plan and watch how it is applied. A compromise is good ''but the devil is in the details,'' John Noonan, head of institutional sales at National Australia Bank in Sydney, told Reuters Television earlier in the day. ''The market will still be sceptical.''