Japan Finance Official Quits, Shoulders Blame : Banking: The move eases the pressure on his boss created by several recent scandals and a housing loan bailout.

Japan’s deputy finance minister has decided to resign, taking responsibility for several scandals, including the ministry’s cover-up of trading losses at Daiwa Bank’s New York office.

Kyosuke Shinozawa’s resignation, which will take effect in early January, was announced Friday by Finance Minister Masayoshi Takemura.

His departure, just seven months after becoming deputy minister, is an unprecedented gesture of attrition from Japan’s most powerful ministry, whose responsibilities range from budget spending and revenue to exchange-rate policy and financial system supervision.

It alleviates the pressure on Takemura, who is fighting to assuage public anger at the government’s decision last week to allocate at least $6.8 billion of public cash toward liquidating bankrupt housing loan companies.

Shinozawa’s departure may be equally designed to deflect growing pressure from the Liberal Democratic Party, dominant member of the government coalition, to break up the ministry into a number of independent agencies.

The announcement followed a wave a criticism for the ministry’s handling of several crises and its supervision of financial institutions.

Shinozawa said he had done no wrong and hoped his departure would improve morale and allow officials to concentrate on their work. His boss said he has no intention of stepping down.

“My responsibility as finance minister is to see through my responsibilities to the end,” Takemura said.

Takemura said the Daiwa Bank scandal troubled Shinozawa deeply.

The Finance Ministry came under harsh criticism from inside and outside Japan after it acknowledged it knew of Daiwa’s $1.1-billion bond trading losses six weeks before officials informed U.S. authorities. Daiwa has been ordered to shut down its U.S. operations.

The Daiwa debacle deepened anxiety over the ministry’s oversight of Japan’s troubled banking industry, which is already saddled by overdue loans accumulated in the 1980s and early ‘90s through speculative lending practices.

The ministry said this week that it would beef up its vigilance of banks, but many said the measures fell far short of reforms needed to make the secretive banking system more accountable.

The Finance Ministry was seen as the architect of Japan’s economic prowess in the 1980s, but since then its domestic reputation has been clouded by financial mishaps and corruption allegations.

In September, the ministry acknowledged that the former chief of its research institute, Yoshio Nakajima, hadn’t paid taxes on more than $500,000 in cash gifts from friends and had invested the money in stocks. Nakajima resigned last summer.

Shinozawa’s resignation will take effect as early as Jan. 5. He will be replaced by Tsutsumi Ogawa, currently head of the National Tax Agency.

Takemura denied the resignation was directly linked to recent criticisms of the ministry’s decision to use tax money to bail out bankrupt housing lenders.

The bailout has angered taxpayers, who believe more should be done to punish the officials responsible for running the companies and that more efforts should be made to collect on the soured loans.