Suspicion of Merciful Makeshift Measure for Presidential Election

The government and the Millennium Democratic Party (Minjoo) announced on December 3, that they reached to an agreement in order for personal delinquent customers who have the financial institutions’ debts of KRW 0.3 billion to apply for the personal workout. However, it is criticized that the announcement seemed to imply ‘merciful policy’ being aware of a presidential election and damaged ‘political neutrality of the administration’ insisted by the government.

Kim Hyo-seok, member of the Millennium Democratic Party (Minjoo) said in a social gathering with reporters, “We make delinquent customers who have less KRW 0.3 trillion of debts from over 2 financial institutes apply for the personal workout. In this regard, the ministry of finance and economy and financial supervisory commission(FSC) agreed.”

He added, “Therefore, out of 2500000 delinquent customers of banks, 900000 customers can apply for the personal workout. It will be enforced as quickly as possible and will be executed during this month at latest.”

After the announcement of the Millennium Democratic Party (Minjoo) was made, Kim Seok-Dong, director of bureau, FSC insisted, “We planed to give benefits of the personal workout to delinquent customers who have made less KRW 0.1 billion of debts from over two financial institutions, but we decided to extend the application targets because there are few applicants. This policy is not related to the election.”

The government and the Millennium Democratic Party (Minjoo) added that even though the above delinquent customers are not qualified for the personal workout because their incomes are less than the minimum living expenses, they can apply for the personal workout if a guarantor, spouse or direct families are agreed upon a repayment of debts.

The current personal workout can be applied only delinquent customers who have had less KRW 50 million of total debts from over three financial institutes. The government planned to extend the target of application gradually considering the original market status, but suddenly extended the target of beneficiary.

The government and the Millennium Democratic Party (Minjoo) also took measures not to have bad influences on a standard of asset quality classification which evaluates a superiority of banks for delinquent customers’ loan assets of financial institutes participated in this policy. People criticized that the household debts are changed into non-performing loans of financial institutes.

Young-Hae Choi Kwang-Am Cheon yhchoi65@donga.com iam@donga.com