FSC chief says debt-relief effects being reviewed 'from multiple angles'

FSC Chairman Lee Eok-won said Wednesday that authorities are examining "from many different angles" whether delinquent borrowers should be pushed to the limit or helped to return to normal economic life through mechanisms such as personal rehabilitation, bankruptcy and debt restructuring.

Lee made the remarks at a plenary session of the National Assembly's Political Affairs Committee, responding to People Power Party lawmaker Park Sung-hoon's criticism that the government had failed to adequately analyze the effects of debt relief. "Moral hazard must of course be prevented, but there are debts that some people simply cannot manage," Lee said.

Park said a senior party official who had once encouraged people to take out loans for investment was now defending debt forgiveness. "Before pushing ahead with a policy worth trillions of won, you need a thorough analysis of borrowers' economic activity rates, employment rates, re-delinquency rates, credit recovery rates and the effect on tax revenue — but I have not received any such policy-effect analysis," Park said.

He also asked how the government planned to address the sense of relative deprivation felt by borrowers who had faithfully repaid their debts, adding that on the question of funding, the only apparent option was contributions from financial institutions — costs that would ultimately be passed on to borrowers through higher lending rates or financial service fees. "This is a misguided policy that undermines the very foundations of the financial market from the outset," he said.