President Lee Jae-myung on the 12th ordered officials to find a solution, even if it requires legislation, regarding debt collection on long-term arrears held by the private nonperforming-loan workout company "Sangnoksoo No. 1 Special Purpose Company (Sangnoksoo)," saying, "It is not right for financial firms that received all possible government support to enjoy the benefits while refusing to shoulder the public burden." He said that during the 2003 "card crisis," financial firms created Sangnoksoo and have carried out "predatory collections" for more than 20 years.
Presiding over a Cabinet meeting at Cheong Wa Dae that day, Lee referred to a report highlighting Sangnoksoo's collection practices on long-term arrears and said, "Didn't financial institutions receive help funded by taxpayers during the past card crisis? They are still tenaciously collecting the arrears owed by people who were part of that cause, and while earning tens of trillions of won in annual operating profit, I saw they receive dividends in the tens of billions to the low hundreds of billions of won."
Lee said, "Does it align with the public's sense of justice to say that (a debt) increased by 10 to 20 times must be repaid by selling off everything in the household down to a single bean sprout until death?" He added, "They are not loan sharks, and financial institutions operate in part by using the government's currency-issuing authority, and they also benefit from restricting others from operating through licensing and authorization regimes."
In particular, he said to review amending the law to require long-term arrears held by Sangnoksoo to participate in the government-led New Leap Fund. Lee said, "The essence of finance is originally 'playing with money' and it is cruel, but there are still limits," adding, "Financial institutions operate in part by using the government's currency-issuing authority, and they benefit from restricting others from operating through licensing and authorization regimes, so is it right to say they will refuse to bear the burden to the very end?"
The New Leap Fund is a program in which the Financial Services Commission and the Korea Asset Management Corporation (KAMCO) purchase unsecured claims that are ▲ in arrears for seven years or more and ▲ 50 million won or less. Financial firms participate voluntarily under an agreement, and when the New Leap Fund buys arrears debt, collections stop. However, because there is no coercion, and to transfer claims to the New Leap Fund, all Sangnoksoo shareholders must agree under its articles of association.
Financial Services Commission Chair Lee Eog-weon said, "On the surface, because it is a joint-stock company formed by multiple institutions, they say it requires unanimous shareholder consent, but in the end there is an aspect where 'profit' sits in the background, so they are passive about joining the agreement," adding, "Because the New Leap Fund itself was a kind of social consensus, it is right for financial institutions to participate." He added, "If we ask the shareholders individually, I think probably all will participate," and "We will devise various measures."