Japan's Bank Rescue Stirs Anger

Taxpayers see mortgage-industry bailout as unfair gift to rich speculators

IN the clean, well-lighted corridors of the Ginza subway station, Tokyo commuters say they aren't pleased with a government plan to use taxpayer money to liquidate seven failed mortgage companies.

''It's preposterous,'' says Yasuto Oku, who works for a petroleum company hard hit by Japan's four-year-old recession. ''I'm a salaryman,'' he says, ''and I know that when a normal company goes bankrupt, it doesn't get relief from the government.''

''Why do ordinary people have to pay if rich people are in trouble?'' mutters Akira Yamada, an advertising agency employee.

The furor over the bankrupt housing-loan firms, known as jusen, illustrates the depth and breadth of Japan's middle-class sensibility. People in the financial and real estate industries profited greatly during Japan's ''bubble economy'' of the late 1980s, and they are now getting little sympathy from those who couldn't make such easy money.

At the same time, the uproar over jusen is showing that an increasing number of Japanese regard the country's bureaucrats, particularly in the powerful Ministry of Finance, with mistrust. On Feb. 6, the ministry released documents showing that it had investigated the jusen loan portfolios in 1991 and 1992 and then let the situation deteriorate. A variety of politicians, including some from the ruling Liberal Democratic Party, reiterated calls for the ministry's reorganization.

When the 'bubble' burst

During the late 1980s the prices of many types of Japanese assets - from land and securities to artistic masterpieces and golf-club memberships - soared. Government monetary policy began to burst this ''bubble'' in 1989, and the ensuing drop in prices created a huge bad-debt problem for financial institutions. Land held as collateral is now worth a third of its ''bubble'' value, analysts say.

The jusen were especially hard hit. Seven of these firms hold at least 6.41 trillion yen ($61 billion) in nonrecoverable loans, according to the Ministry of Finance.

The government initially wanted the institutions that funded the jusen - banks and agricultural credit associations - to cover these losses. But the agricultural credit associations, in particular, argued that they are too weak to pay the high costs of liquidation. So the government has proposed spending $6.5 billion in public money. The government is also promising to use tax revenues to cover half of any future losses incurred in disposing of the assets that the jusen still hold.

Not so fast, say many Japanese and the country's largest opposition political party. For one thing, the critics argue, the jusen extended loans not only to homebuyers but also to real estate developers rushing to cash in on the rising prices of the boom years. These borrowers are also said to include firms and individuals linked to Japan's underworld. This fuels the public perception of shady dealing and complicates asset recovery.

To expedite the collection of unpaid loans to gangsters, the government plans to include police, tax officials, and prosecutors in the Jusen Resolution Corp., the body that will clean up the mess. Private banks attempting to recover funds loaned to gangsters have drawn violent responses.

Many critics also insist that the agricultural credit associations are getting off easy because farmers exert a disproportionate influence in Japanese politics. The associations' executives appear to have shown little restraint in funneling money into the jusen.

Perhaps most embarrassing is that the jusen provided lucrative jobs for several retired bureaucrats and bank executives. The Ministry of Finance says most of the blame for the flawed lending must be laid at the feet of jusen executives, but in some cases those executives were ministry veterans.

The government says the cost to taxpayers of the jusen liquidation will be 22,000 yen ($210) for a family of four, but private analysts say the number may go much higher. In any case, it is not the amount so much as the principle of the government's plan that irks Fusako Iwase.

Mrs. Iwase, a grandmother and longtime political gadfly, is organizing a citizens' group to oppose the jusen liquidation scheme. ''Citizens don't want to pay money for the sake of those greedy people,'' she says of the jusen executives and their borrowers, who are widely assumed to be maintaining enviable lifestyles despite the insolvency of the jusen. ''The government should disclose the salaries of the jusen executives before asking the public to share the burden.''

The government acknowledges it must do more to punish those responsible for the mess. But it says the first priority is to shore up the financial industry, shaken by failures and scandals in recent months. The government also knows that the bad-loan problem affects just about every aspect of the financial system.

The roots of the public clamor for a sterner administration of justice are deep, illustrating some cracks in the Japanese social and economic system.

An offense to egalitarianism

The distribution of wealth is so egalitarian here that Japan has sometimes been called the only truly socialist country. It is a society where most people work hard and where just about everyone's needs are met. But during the ''bubble'' some people began to break the rule - getting rich quickly and without much effort. ''People hate the fact that some people made a lot of money during the 'bubble' period,'' says Makoto Sataka, an author who specializes in economics.

The ministry has long been faulted for arrogance - it is arguably the most powerful single institution in Japan - but increasingly its officials are being accused of incompetence and corruption. Critics are now highlighting a 1990 ministry directive limiting real estate investments because it contained a loophole, allowing the agricultural credit associations to continue funding the jusen without restriction. Banks were also allowed to continue funding real estate transactions, via the jusen, but with some curbs.

Those responsible for regulating the jusen, asserts Mr. Sataka, were ''worse than incompetent.''

Still, the ministry seems confident about its liquidation plan. Sei Nakai, a top ministry official, says, ''We expect that our original plan will be passed [by parliament] with no modification.''