Confused Ruling Party... Major Financial Bills at Risk of Stalling (Comprehensive)

Election Defeat, Entire Leadership Resigns
Bill Passage May Be Further Delayed

Kim Tae-nyeon, Acting Leader of the Democratic Party of Korea, is bowing his head after finishing his speech at the virtual party meeting held at the National Assembly on the 8th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kiho Sung] With the April 7 by-elections ending in a victory for the opposition party, significant changes are expected in the leadership of the ‘legislative battle’ during the April extraordinary session of the National Assembly. In particular, the ruling party’s internal turmoil is inevitable as the entire leadership resigned, disrupting the drive to amend various financial bills until the formation of the next leadership. The opposition party is expected to actively voice calls for deregulation, likely delaying the passage of key financial bills even further.

According to financial and political circles on the 8th, the National Assembly’s Political Affairs Committee, where major financial bills are scheduled to be presented, will hold a bill review subcommittee immediately after the by-elections to begin examining the bills. However, more time is expected to be needed for the bill review. A Political Affairs Committee official explained, "All schedules have been postponed until after the election," adding, "Therefore, the coordination of schedules between the ruling and opposition party floor leaders must take place first before the subcommittee can be convened."

Moreover, with the ruling party’s entire leadership resigning on the same day to take responsibility for the election defeat, the future operation of the National Assembly has become uncertain. Since coordinating the National Assembly’s schedule will be difficult immediately, the processing of bills is expected to be delayed until the ruling party’s floor leadership is reorganized.

In particular, although the Electronic Financial Transactions Act (Jeongeumbeop) amendment, which has attracted significant attention from the financial sector, continues to face delays in its passage, internal consolidation within the ruling party is needed first. The amendment is being legislated under the ruling party’s leadership, but in this election, the ruling party allied with the financial labor union opposing the bill and formed a policy coalition.

Additionally, the conflict over external clearing between the Financial Services Commission and the Bank of Korea is another challenge the ruling party must resolve. An opposition member of the Political Affairs Committee stated, "Usually, bills promoted by the ruling party come after prior coordination, but in the case of the Jeongeumbeop amendment, it appears that the opposition is being asked to resolve conflicts between government ministries," adding, "I have never seen such a case before."

Changes are also expected for the Social Solidarity Fund Act, which is regarded as a financial sector profit-sharing system. Currently, two related bills have been submitted to the National Assembly. Among them, the bill primarily proposed by Democratic Party member Yongwoo Lee has 59 co-sponsors from the same party, indicating strong momentum from the ruling party. This law aims to help low-income people through donations or contributions from the government or entities outside the government, but the market expects financial companies will ultimately be mobilized. This too is expected to face difficulties due to political changes after the election.

Although not a financial bill, the Conflict of Interest Prevention Act is also drawing attention. The core of this bill is to prevent public officials from obtaining unfair benefits by abusing their positions. However, since it is a highly contentious bill with significant differences between the ruling and opposition parties, concerns are emerging that it could trigger disruptions in the Political Affairs Committee’s bill review process.

On the other hand, the Low-Income Finance Act, which requires the financial sector to contribute 200 billion KRW annually, is expected to pass the National Assembly soon. This bill, currently pending in the Legislation and Judiciary Committee, has already been agreed upon by both ruling and opposition parties in the Political Affairs Committee. Once the law is finally passed, banks that previously did not contribute will have to provide about 100 billion KRW annually to fund low-income financial products.

This content was produced with the assistance of AI translation services.