President Lee: "High-Interest Loans for Low-Credit Borrowers, Finance Is the Most Ruthless Sector"

President Lee Jae-myung Presides Over 41st Cabinet Meeting
Ministry of Economy and Finance Reports 114.5 Billion Won in Financial Support for Low-Income Individuals
President Lee Presses, "Aren't the Interest Rates Extremely High?"

President Lee Jae-myung is speaking at the Cabinet meeting held on the 9th at the Presidential Office building in Yongsan, Seoul.

President Lee Jae-myung commented on the high interest rates for loans to low-credit borrowers, stating, "Finance seems to be the most brutal sector." Although these products are marketed as financial services for ordinary citizens, the interest rates are so high that they actually disadvantage the lower-income class.

On the 9th, presiding over a Cabinet meeting at the Presidential Office in Yongsan, President Lee said, "Low-credit borrowers are lent small amounts for short periods at extremely high interest rates. This is exploitation," adding, "Finance seems to be the most brutal sector." His remarks came after Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol reported, "We will provide an additional 100 billion won for financial services for ordinary citizens."

Interrupting Deputy Prime Minister Koo, President Lee questioned, "This is supposed to provide financial opportunities for ordinary people, but aren't the interest rates high?", "Aren't the interest rates for Sunshine Loans extremely high?", and "For the 20 billion won in illegal private loan prevention loans, what are the interest rates?"

In response, Kwon Dae-young, Vice Chairman of the Financial Services Commission, explained, "The interest rates are 7-8%, but the guarantee fees are also 7-8%," adding, "Because the default rate is 20-30%, it is unavoidable." The default rate refers to the proportion of loans that financial institutions are unable to recover. Vice Chairman Kwon explained that because low-credit borrowers often fail to repay, the interest rates are inevitably higher.

Sunshine Loan Interest Rate at 15%: Lee Questions, "How Can This Be Called Financial Services for Ordinary Citizens?"

President Lee pointed out, "It may be considered the core of capital, but how can you label this as financial services for ordinary citizens?" He continued, "In an era where the economic growth rate is less than 2%, if people have to pay interest rates exceeding 15%-more than ten times the growth rate-how can ordinary citizens survive?"

President Lee further stated, "Given the level of national competitiveness and fiscal strength of South Korea, if ordinary citizens borrow 5 million or 10 million won, there's a high chance they won't be able to repay and will fall into bad credit. We need to come up with fundamental solutions," adding, "While financial institutions are making 30 to 40 trillion won in profits from interest margins, how much help do they really provide by making a few hundred billion won from these products?" He strongly criticized the current system.

President Lee also pointed out, "For high-credit borrowers, for people who don't even need money, aren't loans offered at 1.9% or 2%? Lending cheaply to those who don't need it only fuels real estate speculation and similar issues."

Regarding the social contribution of financial institutions, President Lee said, "Some may argue why financial institution profits should be used for financial services for ordinary citizens," but added, "Finance is not something individuals or companies created by developing technology, pioneering markets, or innovating management."

President Lee continued, "They are making money by leveraging the currency issuance authority of the massive community called the Republic of Korea," and added, "Banks are monopolizing this 100%, and the idea that bank owners should take all the profits is, in my view, dogma."

He concluded, "Some may say this sounds like a socialist argument, but I believe finance is somewhat different."