Leveraged ETFs That Cost Retail Investors Money... "Who Ordered Them?" Clash Over Responsibility at National Assembly Audit

[Financial News] On the first day of the National Assembly Planning and Finance Committee's parliamentary audit on the 6th, opposition lawmakers focused their questioning on how the Lee Jae-myung administration introduced single-stock leveraged exchange-traded funds (ETFs). They demanded that the government identify who pushed through the introduction at a closed-door meeting chaired by Kim Yong-beom, then head of policy at Cheong Wa Dae, in January, despite opposition from within the financial authorities. Losses among retail investors in single-stock leveraged ETFs have mounted. The $200 billion investment in the United States and real estate policy also came under scrutiny.
Bae Jun-young of the People Power Party, the opposition secretary of the committee, said during a point of order at the Ministry of Economy and Finance's parliamentary audit held at the National Assembly, "Deputy Prime Minister and Minister of Economy and Finance Lee Hyoung-il and First Vice Minister Kwon Dae-young are key officials who, after attending the meeting chaired by then Cheong Wa Dae policy chief Kim Yong-beom on Jan. 13 this year, jointly reviewed the introduction of ETFs with executives from major securities firms and asset management companies." He added, "Even though it was a closed-door meeting chaired by Cheong Wa Dae, it is necessary to establish responsibility for the two witnesses."
Kang Min-kook of the same party also asked Lee Hyoung-il, "The proposals submitted by private securities firms did not contain a single line about leverage. Wasn't Kim Yong-beom, the policy chief, the person who mentioned leverage at the meeting?"
Lee Hyoung-il replied, "I don't clearly remember whether we discussed that on that day." Kang then criticized him, saying, "If you cannot remember something like that, it is difficult for you to serve as the deputy prime minister and economic chief."
Regarding the growing losses among retail investors following the introduction of single-stock leveraged ETFs, Lee Hyoung-il stated, "I regret that we failed to address in advance the significant losses suffered by retail investors."
Park Su-young of the People Power Party also referred to the closed-door meeting on Jan. 13 and pressed the government, saying, "All the staff within the Financial Services Commission opposed it at the time, so how did it come to be implemented?" He continued, "Who on earth came up with the strategy of pushing through something the FSC had tried to block?"
A dispute also continued over U.S. President Donald Trump's statement that South Korea had agreed to invest a total of $200 billion in projects including the development of liquefied natural gas (LNG) in Alaska.
Lim Yi-ja of the People Power Party criticized the government, saying, "In the case of Project North, South Korea and the United States are sending conflicting messages over a project worth $54 billion." She added, "How can it make sense to refuse when a National Assembly member representing the people—and a member of the relevant standing committee at that—asks for a briefing in advance and wants to review the details?"
Referring to the possibility that the project's feasibility could fall short of the criteria, Lim warned, "This would run counter to the national interest, yet there are no provisions for punishing those responsible if the project fails." She added, "If things go wrong, a parliamentary investigation or a motion seeking the minister's dismissal will follow."
The Democratic Party of Korea, meanwhile, emphasized that the investment decision had not yet been finalized and that the matter remained under review.
Yoon Hu-deok of the Democratic Party of Korea said, "We said we would consult on matters related to Alaska, but isn't it merely at the review stage?" Jung Tae-ho of the party also said, "Because it is still at the review stage, doesn't that mean no conclusion has been reached on whether to invest?" He added, "Isn't it contrary to the facts for Trump or Commerce Secretary Howard Lutnick to speak as if a decision had been made to invest in Alaska?"
Both the ruling and opposition parties expressed concern over the government's real estate policy.
Yoon Hu-deok said, "The government submitted a real estate tax reform plan to the National Assembly, but it appears to have several problems." He added, "I have repeatedly asked for data on the size and proportion of owner-occupied and non-owner-occupied homes among one-household, one-home owners, but they have not submitted it."
Lee Jong-wook of the People Power Party claimed, "Apartment prices in Seoul have risen for 86 consecutive weeks, setting a record for the longest streak." He added, "They have risen every week since the Lee Jae-myung administration took office." Lee Jun-seok of the Reform Party also criticized the government, saying, "Public trust in real estate policy is affected from the moment the government makes a verbal intervention." He added, "The biggest problem with this administration right now is that it is failing to inspire trust."

[email protected] Kim Kyung-min Reporter