TOKYO MEDIA REACTION - "BAD BANK" INITIATIVE

UNCLAS TOKYO 000652 SIPDIS STATE FOR I/RF, PA/PR/FPC/W, IIP/G/EA, EAP/PD, R/MR, EAP/J, EAP/P, PM; USTR FOR PUBLIC AFFAIRS OFFICE; TREASURY FOR OASIA/IMI; SECDEF FOR OASD/PA; CP BUTLER OKINAWA FOR AREA FIELD OFFICE; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR E.O. 12958: N/A TAGS: OIIP KMDR KPAO JA SUBJECT: TOKYO MEDIA REACTION - "BAD BANK" INITIATIVE ¶1. LEAD STORIES: Top stories on Tuesday morning included a fall in land prices across Japan and the Treasury's latest plan to remove the so-called "toxic assets" from banks' balance sheets. ¶2. "Paramount Need to Entice Private Investors" On Treasury Secretary Geithner's disclosure of the Public- Private Investment Program, the top-circulation, moderate Yomiuri wrote (3/24): "The new bank relief plan constitutes a final portion of the Obama administration's efforts to stabilize the banking industry. In view of the snowballing budget deficit, the initiative is programmed to entice private investors with government incentives to buy the toxic assets from the banks' books. The success of the scheme depends on whether enough private investors will be enticed, given that they are afraid of potentially being criticized for making profit out of the program in view of the public rage over the AIG bonus scandal." ¶3. "Bad Bank Initiative Still Not Strong Enough" A New York correspondent for the business-oriented Nikkei reported (3/24): "With the revelation of a new bank bailout plan, the Obama administration is ready to thoroughly deal with the issue of toxic assets, which lie at the core of the financial system instability. The administration has now presented an array of measures, including the reinforcement of the capital base of banks, to stabilize the banking sector. However, concern still remains whether the mobilized policy tools may not be strong enough to tamp down deep- seated market anxiety about financial stability." ZUMWALT