Kim Byung-hwan, Nominee for Financial Services Commission Chairman, Hearing on 22nd... Policy-Focused Questions Expected

Controversies Over Improper Income Deductions and Asset Report Omissions
Most Views See No Major Issue with Candidate Eligibility
Expressed Firm Views Mainly on Financial Issues Like Household Debt in National Assembly Political Affairs Committee Submission

The confirmation hearing for Kim Byung-hwan, the nominee for Financial Services Commission Chairman, is scheduled to be held on the 22nd. Although various suspicions have been raised, since the nominee has provided explanations and there are views that there are no significant issues regarding his suitability, it is expected that verification and questioning on pressing financial issues such as household debt management measures will continue.

The National Assembly's Political Affairs Committee held a plenary meeting on the 17th and adopted the plan for Kim's confirmation hearing. The hearing will take place at 10 a.m. on the 22nd. Kim graduated from Seoul National University with a degree in Economics in 1994, and has served at the Ministry of Finance and Economy, as Economic and Financial Secretary to the President, and as the 1st Vice Minister of Strategy and Finance.

At the hearing, questions are expected to focus first on resolving the household debt issue. According to the International Institute of Finance (IIF) Global Debt Report, Korea's household debt-to-GDP ratio in the first quarter of this year was 98.9%, ranking fourth highest among 59 countries included in the report. After exceeding 100% at 100.5% in the third quarter of 2020, it has fallen to the 90% range after three and a half years but is still considered high by industry standards. This phenomenon is attributed to an increase in bank mortgage loans. In April and May, total household loans in the financial sector increased by 4.1 trillion won and 5.4 trillion won respectively compared to the previous month. Bank mortgage loans increased by 4.5 trillion won and 5.7 trillion won, exceeding the overall household loan growth.

In the confirmation hearing materials submitted to the National Assembly's Political Affairs Committee, Kim stated that he would manage the household debt growth rate within the nominal growth rate to ensure that household debt does not undermine the sustainability of the Korean economy. He noted that an economic structure excessively dependent on debt is unsustainable and acts as a constraint on economic growth. To this end, efforts to improve the real estate financial structure and manage household debt will be pursued simultaneously. Regarding real estate debt, he stated in the materials submitted to the committee, "We will improve the structural problem of excessive borrowing relative to equity capital during real estate development and enhance the rationality and transparency of the housing rental market to induce a reduction in housing costs." Specifically, improvements to the Debt Service Ratio (DSR) system, including whether to include jeonse loans, are being considered. He also emphasized efforts to establish a loan practice of "borrowing within a repayable range and repaying from the beginning."

Kim Byung-hwan, the nominee for Financial Services Commission Chairman, is answering questions from the press as he arrives at the confirmation hearing office set up at the Korea Deposit Insurance Corporation in Jongno-gu, Seoul, on the 5th. Photo by Kang Jin-hyung aymsdream@

In response to lawmakers' questions about whether loan interest rates are necessary to curb the rapid increase in household loans, he said, "It is a matter to be determined autonomously," but added, "If expectations of interest rate declines spread and housing purchase sentiment increases, there is a risk of an expanded increase, so we plan to closely monitor market conditions and manage proactively and preemptively."

Additionally, Kim expressed his opinions on various agendas such as the rational improvement of the principle of separation between banking and commerce, consideration of new approvals for the 4th internet bank, strengthening competitiveness through mergers and acquisitions (M&A) of savings banks, agreement on raising the deposit insurance limit, and the abolition of the financial investment income tax. Among these, questions from the opposition Democratic Party are expected regarding the abolition of the financial investment income tax. Although the Democratic Party has hinted at the possibility of a tax deferral, this is conditional on securing additional tax revenue, and there are considerable opinions within the party that it constitutes a "tax cut for the wealthy."

Regarding Kim's personal background, there is a consensus that there are no decisive defects. His total assets, including himself and his family, amount to 633.13 million won. Specifically, he owns a jeonse right on an apartment in Namgajwa-dong, Seodaemun-gu, Seoul, two cars (a 2016 Lexus RX350 and a 2011 Hyundai Sonata Hybrid), deposits of 129.1 million won, and debts of 368 million won. His spouse has deposits of 73.77 million won, and his mother reported land and buildings worth approximately 184 million won located in Busan. According to traffic violation fine payment records from February 2020 to March this year, Kim paid fines totaling 618,000 won, including six speeding violations (exceeding the speed limit by 20 km/h), four signal or instruction violations, and one center line infringement.

Suspicions concerning his spouse and others, excluding himself, include allegations that his spouse received a salary of 80 million won from the Community Chest of Korea without official hiring records, that the spouse was claimed as a dependent family member for a tax deduction of about 6 million won despite not qualifying for personal exemption, and that farmland and forest land worth a total of 33 million won based on publicly announced land prices were omitted in the asset declaration.