Yoo Seung-min "Household debt could burst anytime"
Ha Tae-kyung "Nationwide 10 million won overdraft accounts"
Lee Jae-myung, Governor of Gyeonggi Province and a preliminary presidential candidate of the Democratic Party of Korea, is announcing the 'Nationwide 10 Million Won Long-term Low-interest Loan Pledge' through a virtual press conference at a building in Yeouido, Seoul, on the morning of the 10th. [Image source=Yonhap News]
[Asia Economy Reporter Park Jun-yi] Opposition presidential candidates have raised their voices in criticism over Gyeonggi Province Governor Lee Jae-myung's 'Basic Loan' pledge. This is due to concerns that household debt is rapidly increasing and banks will have to bear the risk of non-repayment.
The basic loan pledge announced by Governor Lee the day before centers on introducing a 'basic loan right' that allows any citizen to borrow up to 10 million won at a low interest rate of around 3% for a long term.
In response, People Power Party presidential candidate and former Jeju Governor Won Hee-ryong emphasized the risks of the loan itself. On the 11th, he directly criticized on Facebook, saying, "Ignoring the financial market system thoroughly, Lee’s loans are nothing but a 'project to make young adults debtors' at his whim."
He continued, "Summarizing Lee’s pledge, it means that as soon as one becomes an adult, they go into debt, live on small allowances, move into rental housing, and live under the government's watchful eye," adding, "A tyrant would need citizens who obey the government the most."
He then urged Lee, "Stop trying to reduce the country and its people to debtors with no assets. It is too dangerous."
Former lawmaker Yoo Seung-min expressed concerns about the rapid increase in household debt. On the same day on Facebook, he criticized, "Where does Lee’s 'fantasy novel' end? As of the end of Q1 this year, household debt stands at 1,765 trillion won. Household debt is a time bomb that could explode anytime."
He also pointed out, "To implement basic loans, the government would have to force banks and financial institutions. If basic loans become non-performing, the borrowers will become credit delinquents, and banks will have to bear the losses."
Yoo added, "Ultimately, banks will demand the government guarantee and compensation for interest rate differences. If the government is going to guarantee and compensate interest rate differences, it would be better to help those in need through fiscal spending rather than intervening in the financial market."
People Power Party lawmaker Ha Tae-kyung also mentioned the risks of non-repayment and the surge in household debt on Facebook the previous night, asking, "Why create 10 million won overdraft accounts for all citizens while selling out low-credit borrowers?"
Ha stated, "If the situation of low-credit borrowers is unfortunate, the government should expand low-interest refinancing loans guaranteed by the government so they can repay high-interest loans."
He continued, "Household debt has already surpassed South Korea’s GDP at 1,765 trillion won. Is it reasonable to increase additional credit by 450 trillion won by giving 10 million won per person to 45 million adults aged 18 and over?"
He added, "Unless the government creates a basic bank, commercial banks will have to handle this business anyway," and said, "This is nothing but a new form of government-controlled finance that squeezes banks’ heads without any policy effect of protecting low-credit borrowers."
He also criticized Lee, saying, "Because of this basic scam that he has promoted as his flagship brand, he will suffer a setback in this presidential election."
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