Kwon Dae-young, vice chairman of the Financial Services Commission (FSC), dismissed criticism that debt relief for long-term delinquents could cause moral hazard, saying on the 20th, "We are not helping intentional and malicious people," and adding, "This is not populism, government-directed finance, or favoritism."
Kwon made these remarks while appearing on the Presidential Office's YouTube show "Fact Mill" that day, countering some perceptions of long-term delinquent debt relief and stressing that it is "about creating a more advanced financial system that corrects wrongful practices." He raised his voice, saying, "We must not turn our backs on and neglect the rest of those in difficulty because of the malicious behavior of a few. We must level the tilted playing field."
Kwon also drew a line against the criticism that it causes a sense of loss among faithful repayers. "Realistically, how many cases are there of people hiding assets and living as credit delinquents for years?" he said. "They have to bear the disadvantage of finding it difficult even to obtain a credit card, open a bank account, or activate a mobile phone." He continued, "We must not turn our backs on and neglect the 2 to 3 percent of people in difficulty because of a malicious few," adding, "It is right for the government to support recovery before people fall into greater difficulty by missing the right timing while trying to solve the problem alone."
Kwon pointed out, "Naturally blocking intentional and malicious cases and supporting the truly struggling is a financial ecosystem where people live, and it is Korea's financial safety net," adding, "Isn't it cruel to apply only the standard that debt must be repaid unconditionally, even when it is debt that absolutely cannot be repaid due to unavoidable circumstances?"
At the same time, Kwon stressed the importance of system design, saying, "We must precisely select only those in difficulty and adjust or reduce their debt through meticulous screening." He said, "In the past, there was no system to receive information, but a special provision of the Credit Information Act that allows verification of income and assets will take effect starting this August," adding, "We will thoroughly screen assets and income so that there is no moral hazard, which some are concerned about." He also said, "We will only write off debt for those at 60 percent or below of median income who have no recoverable assets," adding, "If hidden assets are discovered, the debt adjustment itself will be nullified." He continued, "The government will thoroughly manage this so that there are no malicious cases or abuse."
