Say the words "vampire squid" around finance-minded folks and they'll think you mean Goldman Sachs . But for truly vampiric behavior, look to a different, and perhaps unexpected, financial firm: Japan Post. Tokyo recently announced yet another move to water down a reform of the government-owned savings institution passed five years ago. It's the latest nibble the parasite is taking out of its host.

Japan Post, which is the world's largest bank by deposits and also happens to run a postal delivery service, was once on the road to privatization—the signature reform of former Prime Minister Junichiro Koizumi. No longer.

A string of Democratic Party of Japan governments first elected in 2009 systematically dismantled his legacy. They delayed the timetable for privatization. They increased the proportion of Japan Post stock the government would retain. They also increased deposit insurance caps to encourage savers to park more money at the bank.

Now Tokyo is contemplating an expansion of Japan Post. Officials last month approved a plan for the company to offer education-savings products, a new foray into the insurance business. There are also rumors the company could start making housing loans. This is all a bigger problem than it appears, and for different reasons than one might think.

The classical complaint about Japan Post—the one that motivated Mr. Koizumi—concerns fiscal policy. Japan Post has historically been the conduit through which the country's high savings were channeled into Tokyo's perpetual Keynesian debt-fueled stimulus spending projects.