Deputy Minister Kim Yong-beom, the Blue House policy chief, said, "Why do the most well-off people enjoy the lowest interest rates, while the most desperate have to use the most expensive money?"
According to political circles on the 3rd, the deputy minister posted an article on his Facebook the previous day titled "Why is Korean finance so cruel: the imperfect science called credit ratings" and said this.
The deputy minister opened by saying that when President Lee Jae-myung pointed to the credit system earlier, "At first I let out a hollow laugh and thought it was a question that did not know the basics of credit," adding, "Giving lower interest rates to those proven capable of repaying is the obvious ABC of finance and an unshakable order."
In Sept. last year at a Cabinet meeting, the president pointed out phenomena such as the lending rate for the lowest-credit borrowers reaching 15.9% and ordered measures, saying, "The most cruel area seems to be finance."
However, the deputy minister stressed, "But that question was not wrong," and said, "It pierced the heart of the 'premise' of credit that we have taken for granted." He continued, "I am someone who has designed, operated, and justified this cruel system," adding, "In that sense, I am a clear accomplice." The deputy minister is a career bureaucrat who previously served as vice chair of the Financial Services Commission (FSC).
The deputy minister said, "The claim that credit ratings measure repayment ability is only half right," explaining, "Ratings look strictly to the past. Variables like job loss, illness, and divorce do not exist in the model." He added, "A credit rating does not predict the future; it is only a finely summarized past."
He went on, "This number determines whether a loan succeeds and sets the height of the interest rate," calling it "an invisible rank insignia designed by finance." He added, "For the right answer of the average, the system willingly sacrifices an individual's grievance," and said, "Under the name of efficiency, an individual's circumstances are not considered."
The deputy minister said, "Risk is real, and a price tag for it is necessary," but asked in return, "The real question is whether the classification of that risk is truly fair and precise." He also said, "It is not that someone pays a higher interest rate because the person is a more dangerous human; it is because the system we created has bundled that person into a risky group."
He said, "The more sophisticated the model becomes, the more precarious the system gets," citing the 2008 global financial crisis. He continued, "Who created the crisis, and then why are only individuals forced to shoulder that responsibility and pushed out of the market?"
Meanwhile, the deputy minister said he would serialize a three-part series titled "The structure of finance," signaling additional posts.