[Gangnam Perspective] Some Things Never Change Over Time

"Implement measures to prevent public discontent caused by banks' excessive profit-taking." "It seems as if struggling small business owners, who work tirelessly, are forced to devote all their hard-earned money to repaying bank loans, as if they are servants to the banks."
These were remarks made by former President Yoon Suk Yeol during a senior secretaries' meeting in February 2023 and again at a cabinet meeting in October of the same year. Since then, banks have been perceived as organizations that make easy money and indulge in lavish performance bonuses.
President Lee Jae-myung's perception of banks is not much different. At a cabinet meeting last September, he stated, "Loans for those in difficult circumstances are more expensive. The financial sector seems to be the harshest domain." At this month's senior secretaries' meeting, he criticized, "Isn't the current financial system essentially a 'financial caste system,' where the poor are forced to pay higher interest rates?"
In reality, debt relief and credit amnesty for low-income citizens have been recurring populist policies across successive administrations. The bad bank is a prime example. The Roh Moo-hyun administration introduced Hanmaeum Finance, the Lee Myung-bak administration established the Credit Recovery Fund, and the Park Geun-hye administration launched the National Happiness Fund. The current Saechulbal Fund is merely a new name, but the core message—'reducing the debt burden for ordinary people'—remains unchanged.
The problem is that the side effects of these policies are also strikingly similar. Over more than two decades, such populist measures have fostered the misguided belief among market participants that if they simply hold out and avoid repayment, a change in administration will eventually bring debt relief. As one financial industry insider noted, "There are numerous cases where individuals who previously received debt relief become subjects of debt restructuring again." As a result, diligent borrowers who faithfully repay their debts and high-credit individuals who manage their credit responsibly are placed at a disadvantage. This is why, despite agreeing with President Lee's proposal that 'high-credit borrowers should pay more interest so that low-credit borrowers can borrow at lower rates,' there are concerns. Well-intentioned inclusive finance for the underprivileged may end up causing harm to other vulnerable groups.
The financial sector points out that the equation 'low income = low credit' does not always hold true. Credit assessments are made based on a comprehensive evaluation of repayment history, debt levels, and the duration of credit transactions. According to the office of Chun Ha-ram of the Reform Party (RP), among the top 30% income group, there are 6.74 million high-credit individuals (with credit scores of 840 or above), while among the bottom 30% income group, there are 2.02 million high-credit individuals. Furthermore, among low-credit individuals (with credit scores of 664 or below), there are more high-income earners (430,000) than low-income earners (340,000).
In fact, as of last September, a reversal in household loan interest rates was observed at major banks based on new lending. This appears to be due to the government's emphasis on 'inclusive finance,' which led to preferential and lower additional interest rates for policy finance products targeting vulnerable groups. Some analysts warn that this reversal in interest rates could become entrenched. Under strong government pressure and criticism of 'profiteering,' the five major financial holding companies have pledged to invest approximately 70 trillion won in inclusive finance over the next five years.
'In financial transactions, credit is paramount. The amount of money banks and other institutions are willing to lend, and the interest charged, depend on one's creditworthiness.'
This is the textbook explanation of credit that we have learned. It is only natural that those with lower credit scores pay higher interest, while those with higher credit scores pay less. I fully support the intention of 'helping the disadvantaged.' This can help alleviate income inequality and expand economic opportunities for the underprivileged. However, no matter how well-intentioned, we must not distort the fundamental principles of the market or the financial system.
Problems in finance should be resolved within the financial system. When politics is imposed on finance, the very foundation of our society, built over time, can be shaken to its core. Both those suffering under the weight of debt and those diligently repaying their loans from dawn to night are vulnerable groups that the government must protect.
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