Analysts and banking experts said on Thursday that a scramble to thrash out a deal among ruling and opposition parties could end up tying the government's hands when it comes to injecting taxpayers' money into weak but solvent banks.

``There is a concern that Japanese authorities will lose the ability to intervene in large but weak banks before they fail or until they are much closer to failure,'' one expert said.

``There are banks that are too big to fail, and if the opposition sticks to its guns there wouldn't be a direct way to deal with that,'' he added.

US treasury secretary Robert Rubin gave voice to Washington's concerns on the matter on Wednesday, telling Congress that Japan needed to devote a substantial amount of public funds to cleaning up its troubled banking system.

``It is critically important that the opposition and themajority party work through this problem in such as way as to make a provision for substantial public funding for Japanese banks as they...deal with weak banks and bad loans, and particularly with respect to weak but solvent banks,'' Rubin told the US house banking committee.

On Wednesday, US trade representative Charlene Barshefsky echoed that concern, telling a news conference that it was critical that Japan set aside substantial public funds for its banking problem.

Japan's ruling Liberal Democratic Party (LDP) on Thursday presented to opposition rivals its latest banking bill proposals in an effort to reach agreement before prime minister Keizo Obuchi meets US president Bill Clinton next Tuesday.

An LDP official told reporters later that Obuchi -- who leaves for the United States on Sunday -- was likely to meet opposition party heads on the matter but that the time of the meeting was not yet decided.

The official, Takashi Fukaya, said the two sides remained deadlocked over two points -- how tohandle the troubled Long-Term Credit Bank of Japan Ltd, and opposition calls for reducing the policy-making powers of the finance ministry.

The LDP, which lacks a majority in parliament's upper house, has in recent days made a series of compromise offers to bring its banking scheme closer to more stringent opposition proposals that would immediately nationalise failed banks, place a heavier burden on shareholders, and shorten the time period needed to effect a financial system consolidation.

In its latest draft, however, the LDP said the government would -- on its own responsibility -- prepare a scheme to stabilise the financial system, including remedying the situation of under-capitalised banks.

The draft did not elaborate on what that scheme might be.

Financial analysts said they welcomed the probable greater transparency and clarity of burden on shareholders likely to result from a compromise which bowed to key opposition demands.

But some warned that without some framework for using publicmoney to strengthen big banks that are struggling, Japan could indeed face the sort of risk to its financial system that authorities, including Bank of Japan (BOJ) governor Masaru Hayami have repeatedly warned about.

``I detect in the recent debate more and more opposition to using public funds, and that is dangerous because public funds have to be used,'' said another foreign financial expert.

Opposition Democratic Party leader Naoto Kan ``is scoring domestic political points, but...this could undermine public support (for using taxpayers' money) and very quickly have a knock-on effect domestically and internationally.''

Whatever framework politicians ultimately agree on, authorities will have a tough time restoring confidence in their ability to implement the scheme, banking analysts said.

``It comes down to two little words that mean so much --`show me','' said a financial analyst Brian Waterhouse at HSBC Securities.