Kim Yong-beom, Chief of Staff for Policy at the Presidential Office, has stoked momentum for an overhaul of the financial system by repeatedly criticizing the existing credit rating framework. Through three consecutive posts titled the "Structure of Finance Series," which he uploaded on social media over three days through Sunday, Kim argued that the credit order — which applies low interest rates to high-credit borrowers who have proven their ability to repay, and high rates to low-credit borrowers — amounts to "an invisible class badge designed by finance." He insisted that "the outdated frame of credit evaluation must be boldly expanded." Kim also said illegal private lending is rampant because financial institutions avoid lending to middle- and low-credit borrowers, adding, "Let's more accurately evaluate the people that institutional finance has failed to sufficiently consider." A former financial bureaucrat himself, Kim offered a note of self-reflection, saying, "I was an accomplice to the cruel financial system."
Kim's deliberate targeting of the financial system aligns with the "cruel finance" controversy earlier raised by President Lee Jae-myung. Citing the fact that a 15.9 percent high interest rate is applied to the lowest-credit borrowers, President Lee called finance "the most cruel domain" and proposed raising loan rates for high-credit borrowers to lower rates for low-credit borrowers. He characterized the current credit-rating-based financial system as a so-called "financial class system in which the poor are forced to pay expensive interest." On X (formerly Twitter) on Monday, Lee signaled his determination to eradicate illegal private lending targeting low-credit borrowers, stating, "Illegal loans exceeding the legal ceiling are invalid. In other words, they do not have to be repaid."
The rigidity of a financial system in which a single failure can lead to exclusion from financial services and a descent into credit delinquency does need to be improved. However, it is a basic market principle to grant commensurate benefits to high-credit borrowers who have faithfully repaid their debts and built up credit, and to charge higher rates to low-credit borrowers who carry a relatively higher risk of default. Distorting applied interest rates through political logic risks threatening financial stability, triggering moral hazard, and shaking the credit order. To prevent the financial exclusion of middle- and low-credit borrowers and eradicate illegal lending while upholding market principles, authorities should pursue measures — under the principle of responsible financial transactions — to expand the microfinance safety net for the vulnerable and to bring low-credit borrowers into the institutional financial system, even if it requires adjusting the legal maximum interest rate.
