Aftermath of Election... Concerns Over Major Financial Bills Stalling

Election Defeat Makes Ruling Party Chaos Inevitable
Bill Passage May Be Further Delayed

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] With the April 7 by-elections ending in a victory for the opposition party, significant changes are expected in the leadership of the 'legislative battle' in the April extraordinary session of the National Assembly. In particular, internal turmoil within the ruling party, which has been driving various financial bill amendments, is inevitable, and the opposition party is expected to actively voice calls for deregulation, likely delaying the passage of major financial bills further.

According to the financial and political sectors on the 8th, the National Assembly's Political Affairs Committee, where major financial bills are submitted, will hold a bill review subcommittee immediately after the by-elections to begin reviewing the bills. However, more time is expected to be needed for the bill review. A Political Affairs Committee official explained, "All schedules have been postponed until after the election," adding, "Therefore, schedule coordination between the ruling and opposition party floor leaders must be done first before the subcommittee can be convened."

Among these, the Electronic Financial Transactions Act (Jeongeumbeop) amendment, which has drawn significant attention from the financial sector but whose passage timing keeps being delayed, requires internal consolidation within the ruling party first. Although the amendment is being legislated under the ruling party's leadership, the ruling party allied with the financial labor union opposing the bill and policy coalition in this election.

Additionally, the conflict over external clearing between the Financial Services Commission and the Bank of Korea is a challenge the ruling party must resolve. An opposition member of the Political Affairs Committee pointed out, "Usually, bills promoted by the ruling party come after prior coordination, but in the case of the Jeongeumbeop amendment, it appears the opposition is being asked to resolve conflicts between government ministries," adding, "I have never seen such a case before."

Changes are also expected for the Social Solidarity Fund Act, regarded as a financial sector profit-sharing system. Currently, two related bills have been submitted to the National Assembly. Among them, the bill primarily proposed by Democratic Party lawmaker Yongwoo Lee has 59 fellow party members as co-sponsors, indicating strong ruling party momentum. This law aims to help low-income earners through donations or contributions from the government or entities outside the government, with the market ultimately expecting financial companies to be mobilized. This too is expected to face difficulties due to political changes after the election.

Although not a financial bill, the Conflict of Interest Prevention Act is also drawing attention. The core of this bill is to prevent public officials from obtaining unfair benefits by abusing their positions. However, since it is a highly contentious bill with significant differences between the ruling and opposition parties, there are concerns it could trigger a breakdown in the Political Affairs Committee's bill review process.

On the other hand, the Low-Income Financial Act, which requires the financial sector to contribute 200 billion won annually, is expected to pass the National Assembly soon. This bill, currently pending in the Legislation and Judiciary Committee, has already reached a bipartisan agreement in the Political Affairs Committee. Once the law is finally passed, banks that previously did not contribute will have to provide about 100 billion won annually to fund low-income financial products.