Minister slams Japanese bureaucrats

Mizuho's ATM problems triggered a harsh response

Japan's finance minister has delivered a tongue-lashing both to his own officials and to Japan's biggest bank, Mizuho.

In a near-unprecedented public tirade against both the bank and his own officials, Masajuro Shiokawa complained that the urgency of Japan's financial problems was not getting through to them.

Tax officials at both the Finance Ministry and the government tax advisory panel were unco-operative and backward in the face of the economic crisis gripping Japan, he told a news conference.

"The panel is in seclusion on a mountain top, and so is the ministry's tax bureau," he said.

"They are only guarding (the status quo) and not forward-looking at all... It's as if they deny the significance of tax in economic policy."

Old guard

A major rethink of tax policy is due from the Council on Economic and Fiscal Policy, an advisory board to the prime minister, is due in June.

Mr Shiokawa admitted that not all its ideas were likely to be entirely practical.

But he said that at least the CEFP - and the equivalent internal tax panel within the ruling Liberal Democratic Party - were trying to think their way out of Japan's huge problems.

While they were looking at how to revive the moribund corporate sector, the Finance Ministry and advisory panel were fixated on ballooning public debt.

That way, they were missing out on the necessity for targeted tax cuts - although tax hikes would probably be necessary too to balance the fiscal impact, he said.

Bank in trouble

Mr Shiokawa's comments came a day after the government scrapped full bank deposit guarantees, sparking fears of a run on smaller banks.

But the biggest headlines on Monday had been reserved for Mizuho, whose creation out of a three-way merger made it the world's biggest bank.

Monday was meant to represent the final melding of all the assets of Dai-Icho Knagyo Bank, Fuji Bank and the Industrial Bank of Japan.

But instead, 6,000 ATMs (automatic teller machines) went offline - and stayed that way till Tuesday morning.

Coming hard on the heels of a glitch at UFJ, the smallest of the "big four" banks, which double charged customers paying bills through the bank in January, the apparent carelessness incensed Mr Shiokawa.

"How can such a stupid thing happen in this day and age?" he asked, accusing the banks of "lacking seriousness".

"How can you expect the financial system to normalise? It looks like they now have a big body and a hollow skull."