Additional 5-10 Trillion Needed to Resuscitate Ailing Financing Sector

The Presidential Transition Committee diagnosed that more public funds, in addition to the huge amount of money already spent, should be poured in to restructure financial institutions other than banks. The committee announced that it has decided to stipulate its diagnosis in its final report.

A senior member on the economy subcommittee said yesterday, "Ministry of Finance and Economy is refusing to compute the amount of the public fund needed more. It argues that a great chaos will engulf the financial market. Everyone in the industry, however, understands we need more public funds. Thus, the chaos theory does not sound persuasive."

The latest move of the committee seems to have been motivated by its desire to delineate the responsibilities of the outgoing administration and those of the incoming one by clearly showing the amounts poured in and to be poured in.

Right upon its inauguration, the committee has strongly demanded the ministry should show how much more money is needed to resuscitate the ailing financing industry exemplified by Korea Investment Trust Management & Securities and Daehan Investment Trust Securities. But the ministry has vehemently refused to comply with the demand, alleging that "just computing the amount of the fund additionally needed is likely to leave an impression that it is to be poured in for sure. Then, the market is going to be reeling from the shock."

Another member on the committee predicts, "With the government refusing to submit relevant documentation, it is impossible to give exact numbers. In my opinion, additional 5-10 trillion would be required."

Joong-Hyun Park sanjuck@donga.com