After weeks of political wrangling, Japanese lawmakers unveiled a plan Monday for passing banking reform legislation that many see as a vital step toward resolving this nation's protracted financial crisis.
Ruling party and opposition lawmakers ironed out the accord after marathon talks during the weekend, raising hopes that bitter political debate will give way to speedy passage of the bills.
Yukio Hatoyama, deputy secretary-general of the Democratic Party, the main opposition group, said he hopes the legislation will pass before the current session of Parliament ends Oct. 7. He also signaled a willingness to extend the session.
Key lawmakers from the ruling Liberal Democratic Party also expressed optimism about early passage for the bills. Yoshiro Mori, the party's secretary-general, said, "We'd like to bring the process to a conclusion as soon as possible."
The compromise, aimed at cleaning up some $1 trillion in bad loans weighing down Japan's banking industry, comes after an initial agreement struck last week unraveled almost immediately.
Prime Minister Keizo Obuchi's ruling party has sought to prevent any potentially destabilizing bank failures by infusing public money into banks. But opposition parties have been wary of sticking taxpayers with the bill for bailouts of badly managed lenders.
The latest accord addresses a trio of controversial issues that had bogged down passage of the broader banking reform package. It focuses on the use of public money, the role of the Finance Ministry and the fate of an ailing major credit bank.
The two sides agreed to set up an as yet unspecified framework for rescuing weakened banks by allowing them to replenish capital reserves with government funds.
They also pledged to transfer some crisis planning and management authority from the Japanese Finance Ministry to a new independent oversight committee.
During the weekend, ruling party and opposition lawmakers agreed to allow the government to nationalize the Long-Term Credit Bank of Japan Ltd. by purchasing shares in the ailing lender.
The bank is the parent company of Japan Leasing Corp., which collapsed late Sunday with debts of about $17.9 billion. It filed for bankruptcy after lawmakers had vowed to not allow LTCB to write off soured loans extended to Japan Leasing and two other debt-burdened affiliates.
The chief of Keidanren, Japan's main big business lobby, was encouraged by the new accord but urged swift action in carrying it out. "Parliament has been in session for 60 days; I hope it won't take another 60 to get the agreement finalized and passed," Takashi Imai said.
U.S. Ambassador Thomas Foley also welcomed Monday's breakthrough. "We think it was a very constructive agreement. We were very glad to hear it," Foley said.
The United States and other nations have been growing increasingly impatient with Japan's laggard pace in approving the bills, which are seen as essential to nursing the economy out of its recession.