The Korea Herald


Cheong Wa Dae slams plan for savings banks victims


Published : Aug. 10, 2011 - 19:37

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Cheong Wa Dae on Wednesday disapproved of a parliamentary move to compensate the victims of failed mutual savings banks for their lost savings beyond the legal limits.

Rival parties agreed Tuesday to seek a special law to reimburse individual customers and bond investors in nine suspended savings banks for their losses of up to 60 million won ($55,325). The current law guarantees up to 50 million won in deposits.

“That would be breaking the current law,” a senior Cheong Wa Dae official said.

“If they change the law, it would be unfair for victims of savings banks that had gone bankrupt earlier and will leave a bad precedent.”

The Cheong Wa Dae official said the push to raise the deposit guarantee could disrupt application of the law, while noting that the government was trying to find ways to aid the victims as much as possible.

“The current deposit guarantee of up to 50 million won is a well-known fact and a social promise,” he said.

The presidential office, however, is wary about commenting on the possibility of the president exercising his right to veto a bill.

“As of now, it is only a plan drawn up by the subpanel and has not officially turned into a bill yet,” another senior presidential aide said.

“It is too early to discuss the (president’s) right to veto; whether or not to accept (the bill) will be decided once it passes through the National Assembly’s plenary session.”

The subpanel on damages under the National Assembly’s special committee for probe into the savings banks scandal said deposits exceeding 60 million won should also be reimbursed as much as possible.

The subpanel had previously considered raising the limit to 200 million won, but settled on 60 million won amid mounting public criticism.

The special committee on Wednesday called on the government to take stronger actions to reimburse those who lost money as financial regulators failed to supervise the savings banks.

“Financial bureaucrats are responsible for the savings banks scandal,” Rep. Cha Myung-jin of the ruling Grand National Party on the special committee said.

Finance Minister Bahk Jae-wan maintained that the government could not take drastic measures to compensate the losses.

“It is difficult for the government to agree to a measure that will stir up the order of the financial markets as it would deal a major blow on the nation’s credibility,” Bahk said.

“It would be unfair for past cases where not enough compensation was provided for losses partially caused by the government’s negligence.”

By Kim So-hyun (