[Hear from Ruling and Opposition Presidential Campaign Finance Chiefs] 'Full Reconsideration of Geumsan Separation, Correction of Discrimination Between Financial Companies and Big Tech'

Interview with Kim Byung-wook, Democratic Party of Korea, and Yoon Chang-hyun, People Power Party

▲ Representative Kim Byung-wook (left), Representative Yoon Chang-hyun (right)

[Asia Economy Reporter Shim Na-young] 'Full reconsideration of Geumsan separation, correction of discrimination between financial companies and big tech' 'Granting subsidiary new share subscription rights to minority shareholders of the parent company during physical division' 'Banks need to refrain from performance bonuses and dividend feasts'

These were commonly mentioned by Kim Byung-wook of the Democratic Party of Korea and Yoon Chang-hyun of the People Power Party, both financial strategists for the ruling and opposition presidential candidates, in an interview with Asia Economy. However, their opinions differed somewhat on the 'specific reasons why' such as the reconsideration of Geumsan separation.

Rep. Kim said about innovative companies (big tech), "While relaxed regulations apply at the initial market entry stage, equal regulations should be introduced thereafter," and added, "The side effects of relaxing Geumsan separation can be prevented through behavioral regulations such as prohibiting loans and guarantees to major shareholders' special related parties and affiliates." Rep. Yoon pointed out regarding the main reason for Geumsan separation, ‘the financial sector becoming a private treasury for conglomerates,’ that "The era has changed so that large corporations can raise funds at much cheaper interest rates in the global financial market," and "Geumsan separation is more a matter of philosophy than legislation. The perspective on the relationship between finance and real economy, and finance and corporations, is extremely fixed and narrow."

Regarding the 139 trillion won scale loan maturity extension for self-employed individuals, both lawmakers agreed it should be maintained until the COVID-19 situation ends. Rep. Yoon emphasized, "During the COVID-19 situation, proper credit evaluation is not conducted at all, so stopping it now is like telling them to die," and "Once the COVID-19 situation ends, business will normalize, and credit evaluation should be based on that time."

Both lawmakers strongly criticized banks holding performance bonus and dividend feasts despite recording record-high net profits. Rep. Kim said, "I do not want to criticize private companies for giving performance bonuses, but banks now should focus more on building reserves," and "Due to the COVID-19 crisis, small business loans and interest repayments have been deferred, lowering delinquency rates, so a detailed analysis is needed on how much loan defaults might occur during such times." Rep. Yoon also said, "If proper credit evaluation is conducted on self-employed loans, much of the banks' profits might need to be used to cover bad loan reserves," and "They are giving (performance bonuses and dividends) very lavishly; I wish they would be a bit more moderate."

Regarding criticism that minority shareholders suffer from subsidiary listings after physical division, both lawmakers proposed granting subsidiary new share subscription rights to minority shareholders of the parent company, and Rep. Kim additionally mentioned granting the right to request the purchase of parent company shares.

(Full text published in the March 3 [Ruling and Opposition Financial Strategists Interview] article titled "Kim Byung-wook: Need to Reconsider Geumsan Separation")

Kim Byung-wook, Head of the Functional Headquarters of the Democratic Party of Korea's Presidential Campaign Committee. / Photo by Yoon Dong-joo doso7@

- Candidate Lee Jae-myung said, "Economy is politics," and "Finance is not just."

▲ Saying finance is not just means that the proportion of asset income is increasing while earned income is not keeping up with asset income. I do not want to deny the market logic that people with high credit receive more financial benefits, but even low-credit individuals should be helped to receive financial benefits. Because there are institutional limitations on the private side, policy financial institutions must play a role. The basic loan policy also came from that direction.

- The opposition criticizes basic loans, saying they should be called welfare, not loans, because they do not have to be repaid.

▲ Although repayment is not required, credit ratings will be lowered. Not repaying is a big negative for the individual. Education is needed on the borrower's responsibility and what happens if repayment is not made.

- You pledged unilateral binding force for consumer protection, but isn't that difficult from the financial companies' perspective?

▲ Currently, both consumers and financial companies must agree on the dispute mediation committee's decision for final confirmation. If one side disagrees, a lawsuit must be filed. Unilateral binding force means final confirmation if only the consumer agrees. However, if this is expanded infinitely, it would fundamentally nullify the constitutional right to sue. Therefore, it is proposed to apply only to consumer damages up to 20 million won.

(Full text published in the February 24 [Ruling and Opposition Financial Strategists Interview] article titled "Yoon Chang-hyun: Extend SME and Self-employed Loans Until COVID Ends")

Yoon Chang-hyun, Member of the People Power Party./Photo by Yoon Dong-joo doso7@

- What is candidate Yoon Seok-youl's economic philosophy?

▲ He prefers things that are feasible and dislikes abstract things. He does not like economic slogans such as KOSPI index 5000 (Candidate Lee Jae-myung's pledge), 747 (Lee Myung-bak's pledge: 7% growth rate, 40,000 USD national income, 7th largest economy). He is close to pragmatism and practical realism.

- Recently, the Discovery Fund has become problematic, similar to Optimus and Lime, and there are connections with political figures. It seems political influence in our financial sector has become too strong.

▲ That is a new form of collusion between politics and business. Without a person like Jang Ha-sung, would the fund have been properly sold? Attention should be paid to the possibility of collusion through funds. Why did banks sell so many funds to the public? Isn't it because of the name value of Jang Ha-sung and Kim Sang-jo? Looking at the behavior of the Industrial Bank of Korea officials who sold Discovery, their behavior was unusual. The concept of 'a fund pushed from above' subtly permeated, leading to more over-the-top behavior than usual.

- What institutional improvements are needed to break such links?

▲ Banks themselves need to come to their senses. It would be better if the administration did not send unqualified parachute personnel. This is a very bad case of collusion between government-controlled finance and political-business collusion. If these two are cut off, the problem will be resolved.

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