The Liberal Democratic Party proposed December 16 that the government cross the Rubicon into the rough political and economic terrain of public-sector support on a massive scale for the nation's beleaguered financial institutions. Effective implementation will depend on widespread public acceptance as well as on bureaucratic decisions still to be made.
Voters are likely to be surprised at the vastness of the effort being asked.
Indeed, they may well come to wonder whether the massive projected price tag is an underestimate. Although the problems of the American financial sector hardly were confined to savings and loans, most of the federal government's money went to that part of the business. In contrast, the LDP's Special Financial System Stabilization Committee, chaired by former Prime Minister Kiichi Miyazawa, proposed measures that could have the effect of propping up not just a relative handful of depository institutions but banks of all sorts while also providing indirect help to securities companies and insurance firms. More significantly, assistance would go to comparatively healthy financial firms as well as be used to wind up the affairs of failed institutions, the mandate of the Resolution Trust Corp. in this country. In this respect, the LDP blueprint may have more in common with the schemes used in Finland, Norway and Sweden in the early 1990s than with the savings and loan cleanup in the United States.