TOKYO -- Finance Minister Ryutaro Hashimoto, harshly criticized for lax regulation in the face of a series of financial market scandals, tendered his resignation Thursday.
In yet another scandal, the chairman of Fuji Bank quit, the Associated Press reported.
Fuji chairman Taizo Hashida, whose bank is the world's third-largest in terms of capital, resigned over his bank's involvement in issuing forged deposit certificates that clients were able to use as bogus collateral for loans.
The resignations were the latest in a series to hit Japan's close-knit financial community. Stepping down is a common act of contrition among top officials in Japan when companies or government agencies are sullied by scandal.
Top officials at the Nomura and Nikko brokerage houses resigned over the summer in scandals sweeping the securities industry for which many analysts hold the Finance Ministry partially responsible.
Although his impending exit had been widely reported, Mr. Hashimoto waited to tender his resignation until parliament passed legislation Thursday prohibiting brokerage houses from thei widespread practice of compensating favored clients for investment losses.
Tearful Resignation
"I should have exercised better direction, so I am taking top responsibility by submitting my resignation," Mr. Hashimoto, 54, his eyes glistening with tears, told reporters.
Over the past several months, about 20 securities houses have admitted about $1.6 billion in paybacks to favored customers, including such major companies as Toyota, Nissan, Matsushita, and Hitachi. Small investors who did not receive such preferential treatment were enraged.
Despite Mr. Hashimoto's pledge to "ensure this never happens again," little change appears likely in Japan's widel interlocking financial industry, other than outlawing loss compensation, said Robert Zielinsky, senior analyst at Jardine Fleming Securities.
"The reforms are extremely superficial; it's just confirmation that the Japanese government doesn't intend to create a fair financial system," he said.
Early next year, parliament is expected to approve a government proposal for a new financial investigative body.
But a decision to give the proposed agency no punitive powers and to place it within the finance ministry dashed hopes among ministry critics for an independent securities watchdog like the U.S. Securities and Exchange Commission.
Mr. Hashida's resignation as chairman of Fuji Bank was accompanied by that of a vice chairman of Tokai Bank, another institution among several to have acknowledged issuing false deposit documents.
