Bank "acting weird", want's loans paid back

Charles Jannuzi b_rieux at yahoo.com
Thu Jun 27 17:23:13 PDT 2002


A far different take on Shinsei and Ripplewood, though somewhat dated and refers to the Sogo bankruptcy (and in fact Sogo was not saved and it was profitably sold off by the 'creditors' who came in late, like Ripplewood), not the Daiei one:

------------------------------ http://www.weeklypost.com/000731/000731b.htm

. Role of Chairman of Japan's Federation of Economic Organizations Questioned

The sale of LTCB to Ripplewood was outrageous. The government's decision was a betrayal of the nation. Ripplewood paid only $10 million for the acquisition through a purchase of LTCB's stock.

Ripplewood intentions lie in their strategy for claiming the bad debts of borrowers such as Sogo and will list Shinsei Bank in Tokyo Stock Exchange with the value of $30 to 40 billion in five years. Ripplewood's acquired the LTCB at an unbelievably low price and now wants to let the Japanese taxpayer pay the debts. In doing so, Ripplewood will be able to make $50 to $60 billion after five years or so.

Shisei Bank has outside executives such as Kei Imai, the Chairman of Shin Nippon Steel Co. and the Chairman of Japan's Federation Economic Organization called, Keidanren, the highest organization of Japanese business. Also, Hirotary Higuchi, the Honorary Chairman of Sapporo Beer Co. who was appointed as the Chairman of the Economic Strategy Conference under the Obuchi Administration, is an outside member of the executive board of Shinsei Bank.

Their duty is to work for the stockholders of Shinsei Bank and the stockholder is Ripplewood. These two dignitaries are in public service positions that require them to serve the interests of the Japanese nation. Why should they work for the profit of Ripplewood? This is outrageous.

In the case of Kei Imai, he once said, 'I work for the benefit of the nation.' However, he remarked, "The nation blew the Sogo reconstruction plan which aimed at minimizing the taxpayer's burden when Sogo changed its request from asking banks to bailout debts to filing for bankruptcy."

He must be joking. If he really stood on the side of the nation, Mr. Imai should have tried to persuade Ripplewood by saying, "Take the loss and remove the clause regarding the special collateral agreement in the acquisition contract of the LTCB with the Japanese government.'

It is ridiculous that the Chairman of the Japan's Federation of Economic Organizations represents Ripplewood, a group of foreign investors. (The Weekly Post sent a letter to Kei Imai questioning what Mr. Omae raised, but no response has been received from his office.)

Even if Shinsei Bank accepted the bailout of Sogo's debt, Sogo would have gone bankrupt. This reality cannot be change. A troubled company that has completely lost the support of consumers is doomed to go bankrupt. The government understood the situation but they did not let them go bankrupt. They decided to use $40 billion of the taxpayer's money to save the department store. The government should have let it go bankrupt as soon as it found out that Sogo was in financial trouble.

Now it has become clear that Shisei Bank is an American-style bank and takes the position that they will say no to whatever they don't want to do. They are creating panic amongst Japanese banks, which have been protected and spoiled by the convoy system.

Following the action of Shinsei Bank, Daiichi Kangyo Bank is attempting to consummate claims on the bad debt of financially troubled Hazama Construction Co. Now, the practices of Ripplewood have become the Japanese version of the 'Untouchable.' If someone touches Ripplewood, Paul Volcker, the former FRB Chairman and a big boss of Ripplewood comes forward and expands the issue to a diplomatic one between the US and Japanese governments. Therefore, Ripplewood appointed big shots from the US and Japanese governments and the business world.

The third problem is the attitude of Japanese government branches. They are trying to make the US government feel better. What direction is the Japanese government looking in? The government officials keep saying, "We will not be the cause of a world financial panic." What they are doing is just following what the US government says.

The Japanese government is simply a 'Yes-man' of the US government. When the US government said to Japan, "Keep the prime rate low," the Japanese government replied, "We will keep our zero-interest rate policy."

The Japanese government considered that it would wrong to continue such a policy and expressed this to Laurence Summers, the US Treasury Secretary who then threatened the Japanese government, saying, "Give priority to the policy for economic recovery. Continue your zero-interest rate policy." Japan's Finance Minister Kiichi Miyazawa immediately replied, "It is too early for Japan to discontinue the zero-interest rate policy." Mr. Miyazawa is just a messenger of the US government.

The reason why the Japanese government continues to follow a zero-interest rate policy is the reflection of the intention of the US government. The US wants Japan to keep the policy because it helps the US economy. The US economy is unstable in terms of financing. The US high interest rate is attracting money from all corners of the world.

Japan's continuation of the zero-interest rate policy will continue to benefit US interest rates which has been allowing Japanese banks and corporations to borrow cheap money. However, Japanese companies as manifested by Sogo, Shinsei Bank and Industrial Bank of Japan, have been spoiled by this low interest rate policy and have survived due to this lax environment.

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Obviously the part about the US's ability to attract money from all over the world seems a bit iffy now.

CJ

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