The Japanese bank bail-out may be a model for the latest proposal floated by Prime Minister Primakov. Primakov suggests creating a new regulatory agency to sort Russia’s banks into three categories: those with capital and liquidity; those with capital but lacking liquidity; and those with neither capital nor liquidity. Banks in the third category would be allowed to fail–except for a politically favored fourth category, those deemed “essential.” They would be rescued regardless of their condition…. Primakov and Central Bank President Viktor Gerashchenko hope to bring Western capital (and credibility) into the banking system by promoting the transfer of bank stock to Western creditors in payment of bank debts. At the same time, Gerashchenko insists there are no plans to change laws that prohibit foreign banks from holding more than 12 percent stake in a Russian bank or from offering retail services through their own branch offices.