President Lee Jae-myung called for an aggressive debt forgiveness policy on the 15th, saying, "If someone has incurred debt but lacks the ability to repay it, allowing bankruptcy and discharge to give them a fresh start is socially beneficial." He added, "Rather, it appears to be a moral hazard for financial institutions to harshly manage long-term delinquent debtors."
President Lee made the remarks at a government ministry work report held at the Yeongbingwan guest house of the Blue House, following a report by Financial Services Commission Chairman Lee Eok-won. "Forgiving debt quickly allows that person to engage in normal economic activity, and that is how the economy runs properly, isn't it?" he said. He stressed, "In advanced countries, this is done very routinely, easily, and quickly, but in our country it is far too difficult. There should be no situation where a person dies over debt they cannot repay, or is isolated from society and unable to engage in economic activity, resulting in losses for the entire community."
Regarding the argument that an aggressive debt forgiveness policy induces moral hazard, he called it "irresponsible incitement." He said, "Financial institutions, when they lend money, originally factor in that a certain number will fail to repay and price all those costs in, collecting it all through interest. So it is not even a loss." He then said, "It is not moral hazard," asking rhetorically, "Who would choose to become a credit delinquent over a few tens of millions of won, unable to find a job, unable to open a bank account, unable to secure a home, having assets seized, and living like that?" He added, "If we fail to do what needs to be done because of criticism or incitement, what will become of society? Rather, it is moral hazard for financial institutions to harshly manage long-term delinquent debtors."
