Leverage ETF blame game dominates Democratic Party's final leadership debate

A heated exchange over responsibility for single-stock leverage ETFs dominated the final televised debate among Democratic Party of Korea leadership candidates ahead of the party's Aug. 17 national convention. Candidate Kim Min-seok criticized what he called excessive political attacks from within the ruling party, while candidate Jung Chung-rae pressed him on accountability, saying Kim was making "responsibility-dodging remarks" by claiming he had never personally ordered the measure.

At the debate held Wednesday at SBS Mokdong Studio in Yangcheon-gu, Seoul, candidate Song Young-gil opened his response to a shared question on leverage ETFs by saying, "I would first like to apologize to the public." Song acknowledged unavoidable considerations related to foreign exchange reserves and exchange rate management, but said the move had been hasty. He pledged to raise margin requirements to curb short-term volatility and to monitor markets closely to create an opportunity for a turnaround.

Kim also apologized to the public, but said it was "inappropriate" for the opposition — and particularly those within the ruling party — to use the issue as excessive political ammunition. He explained that the Cabinet meeting that approved the leverage ETF regulations had been chaired by him because the president was traveling abroad that day, and said he had received no special in-person briefing beforehand since the matter fell under the purview of the economic team.

Jung countered that the April 21 Cabinet meeting listed Kim as the submitter of the relevant legislation and that Kim had presided over it. He also cited the head of the Financial Supervisory Service, who said he should have blocked the measure "even if it meant lying down in front of it." Jung said it was "a relief" that Kim had apologized moments earlier, but maintained that Kim's insistence that he had never directly ordered the measure amounted to dodging responsibility. He added that if disciplinary action were warranted, it would ultimately be the president's call, but said he believed strong measures were necessary.

Jung kept up the pressure during the open-floor debate segment, calling single-stock leverage ETFs a contradiction in terms — "like hot ice cream" — and questioning whether such products ever needed to exist. He noted that shares of SK Hynix and Samsung Electronics had been on a sustained upward run with little prospect of falling.

Jung also took aim at supreme council candidate Seo Mi-hwa, saying she had attacked him for passing the measure into law without distinguishing between a presidential decree and actual legislation, and had yet to apologize. He said he would continue to urge those involved to offer comfort to investors who had suffered losses and to speak with a sense of responsibility.

Kim said he had no desire to claim he bore no responsibility, given that he had been overseeing state affairs on behalf of the president. However, he said responsibility for the ruling camp's policies should be shared collectively, and that singling out an individual for political attacks over the leverage ETF issue did not seem appropriate.