TOKYO, June 26 - Financial Services Minister Hakuo Yanagisawa said on Tuesday he expected the United States to show understanding on Japan's efforts to clean up banks' bad loans at the U.S.-Japan summit meeting this weekend.
"The bad loan problem is not necessarily the main reason behind the stagnant economy, and the economy will not recover all of a sudden after we overcome those problems," Yanagisawa told a news conference.
Asked how he thought the United States would receive the policy report released last week by the government's economic panel, Yanagisawa said: "If Prime Minister (Junichiro Koizumi) explains the report to the U.S. side, I think they will understand it."
The report included Yanagisawa's policy initiatives on promoting the disposal of bad loans.
Koizumi is expected to explain the report to U.S. President George W. Bush when they meet on June 30 at the Camp David presidential retreat.
The report said that banks, which must dispose of their core bad loans within two to three years under government guidelines set in April, would be asked to sell remaining bad loans after that period to the state-backed Resolution and Collection Corp (RCC).
The RCC, which was set up two years ago to help banks clean up their balance sheets, will be allowed to run trust banking operations to enable it to buy bad loans in various forms. The report is set to be approved by the cabinet later on Tuesday