1. Objective of drafting "the Specific Arbitration Bill"

Interviewer:
　First, I heard you brought various opinions together this bill which concerns specific arbitration measures for avoiding bankruptcy among debtors who owe large sums of money. I 'd like to ask you about the significance and objectives of this bill.

Rep. Yamamoto:
　The most serious problem in Japan's economy is that of substantial excessive debts imposed on the balance sheets of the corporate sectors and that of individuals. Without eliminating this obstacle somehow, there is no use in undertaking stimulus measures.
　Basically, there are only three ways of eliminating this obstacle. One is for banks lending money to forego the loan and solve the problem. It may be related to both corporate loans and individual loans. By foregoing the loans, it is possible to expedite recovery in the corporate economy as well as the individuals. The second way is for the government to purchase all the bad loans using public funds. The third way is to use an inflationary policy to artifically increase the shrunk part of the assets in order to gain the balance. There are only these three ways.
　I believe that the first method is the best because the costs are low and effective and there are no side effects to it. The inflationary policy that I mentioned last will surelly become the cause of later trouble, and it will ruin the economy. The second method requires the government to process bad loans using 100 trillion yen. There is no money since we are struggling with the issuance of deficit-covering bonds.
　The best policy for processing bad loans is for the banks to forego the bad loans. If processing by the banks does not suffice, owner's equity will become insufficient. For the part where processing by the banks does not suffice, it is extremely effective for the government to invest money in the banks. Taking the opposite view, the investments banks should be used to help the real sector of the economy. Otherwise, it loses its significance.
　There is no economical significance in merely cleaning up the bank's balance sheet. It only becomes important when it is used to rescue the real economy. This is the least expensive way of handling the bad loans without side effects. Of course, there are ethical problems such as moral hazards.
　Such issues should be handled between creditors and debtors with the maximum care. Of course, economic issues should be distinguished from ethical ones. For example, economical issue should not be deal with on purely ethical grounds.
　There is no incentive for individual banks to carry out such actions. This is because the best strategy for individual banks to obtain profits is to maintain the status quo unless they go bankrupt. From the standpoint of the national economy, however, there can be no economic recovery of Japan unless banks proceed actively with bad loan processing. Therefore, the government has to approach this from the standpoint of the national economy and demand that banks process bad loans. In addition, there should be an arbitration system between creditor and debtor.
　However, when considering how arbitration should be implemented, we must realize that the present bankruptcy law stracture of Japan has not yet to be enough. Under the bankruptcy law stracture of the United States, the court can execute necessary actions with its compulsive right under chapter 11 and chapter 13. In Japan, however, the legal system has not been developed for such practical usage. One way of handling disputes in Japan is civil arbitration. I thought about using this to create specific arbitration and to handle the dispute in a professional manner.

Interviewer:
When is that bill expected to pass in the Diet's ?

Rep. Yamamoto:
　It's my intention to have it pass the Justice Committee as soon as possible. We are now in the middle of achieving a reconciliation among the the ruling and the opposition parties. Other, bills submitted to the Justice Committee have a tendency to cause controversy between the majority and minority parties. Moreover, We have local elections in April. This has placed us in a situation where we may not be able to deal with the bill before the start of Golden Week in early May.