I suggested at the beginning of the Hatoyama administration that Kamei Shizuka, the Minister of State with the double portfolio of Financial Services and Postal Reform, would be the wild card in the Hatoyama deck. He has not disappointed so far, predictably putting down his marker on Japan Post and more surprisingly, to everyone’s alarm, calling for a moratorium on bank loans to small and medium businesses—as well as speaking up on other issues as the head of the junior-most coalition partner People’s New Party.
A standstill on the privatization process for Japan Post had been a foreordained conclusion since the portfolio fell to Kamei, who had been exiled from the LDPO when he opposed then Prime Minister Koizumi’s privatization plans. Thus, most of the media attention, mostly unfavorable, fell on the choice of Jiro Saito, a former MOF Vice-Minister, whose appointment (as well as the nomination of another ex-MOF official to the board of directors) was attacked (unfairly in my view) as a “decent from heaven,” as the new Japan Post CEO, while Ayako Sono, the 78 year-old conservative Catholic novelist, also attracted some attention as a celebrity appointment to the JP board. What was overlooked in all this, though, was the overall, old-school LDP look of the new JP leadership. With two ex-MOF officials and one ex-Vice-Minister of the Ministry of Post and Telecommunications (now folded into MIAC) on board as well as Hiroshi Okuda, the previous Keidanren Chairman, and a top executive from Canon, which currently holds the Keidanren chair on the board, it’s about as “1955 System “as it can get without being an LDP selection outright. Sono herself has graced many a government advisory board and was brought in as chairman at the Nippon Foundation by the Sasagawa family to clean up the image of their fiefdom. Also notable is the fact that there is only one member of the board with banking experience, a former executive at the failed Long-Term Credit Bank.
More surprising and potentially far more damaging, at least in the short run, was Kamei’s call for a 3-year moratorium on bank loans to small and medium businesses. Taken at full face value, the populist measure would have wreaked havoc on commercial financing. Subsequent negotiations whittled it down to a non-mandatory measure with a 60% semi-government guarantee and reporting requirements—not that far beyond the scope of past counter-recession measures (though the reporting requirements will serve to exert public pressure on the banks) . In fact, it is likely that the exercise will be repeated if there is a second dip in the economic recovery as many fear and some predict.
What does the future hold for the DPJ with regard to Kamei’s antics? Not much, actually. I think that he’s basically shot the works. He buried Koizumi/Takenaka’s legacy, and made his mark on his other, financial, portfolio. His populist instinct will no doubt lead to more outbursts as we go along, but I believe that we’ve seen the best (or worst, depending on your perspective) of his achievements. And he should be happy with that.