Committee backpedals on savings banks compensation

While seeking a tie-up regarding the state investigation on the collapse of savings banks, rival parties disputed the range of the compensation for victims.

It was reported Tuesday that the parliamentary committee on the savings banks decided to fully compensate all losses within the maximum range of 200 million won ($184,843).

The committee, however, soon denied the reports and announced the ceiling would be 60 million won, according to officials.

“The very point of the damage compensation was to relieve low-income citizens of their irreversible financial losses,” said Rep. Goh Seung-duk of the ruling Grand National Party.

“Large depositors are not subject to the state support in this case.”

Rep. Cho Kyoung-tae of the main opposition Democratic Party said that the 60 million won line was a reasonable boundary, considering the distribution of the savings amount.

“Almost 90 percent of the savings banks’ victims deposited money within 50 or 60 million won,” Cho said.

“The amount was the most realistic answer.”

The 20 million won ceiling plan was merely an option suggested during the committee discussion, he also said.

The idea of state-compensation for the victims of the failed savings banks has so far faced fierce resistance from financial officials and experts.

“It is inappropriate to make exceptions and to legislate a special law for every crisis,” GNP chairman Rep. Hong Joon-pyo told reporters on Tuesday.

“The state must first be proven to have neglected its financial supervisory duties and then be legally obligated to pay for the damages so caused.”

This is why the compensation talks may not make progress without a state investigation and the following witness questioning, he said.

Cheong Wa Dae and the Cabinet are more strongly opposed to the legislation of the special compensation law.

“Such exceptional compensation may lead to the downfall of the state’s financial rating,” said Finance Minister Bahk Jae-wan during the meeting.

Cheong Wa Dae officials also hinted that the president may veto the bill, should it be passed by the parliament.

DP leader Rep. Sohn Hak-kyu, on the other hand, underlined the government’s duty to relieve the victims’ financial damages.

“The savings banks scandal was clearly due to the government’s policy failure or supervisory negligence,” Sohn told reporters on Wednesday.

“The savings banks, though aware of their financial unstableness, actively deceived the depositors with a higher interest rate and financial organs neglected such irregularities.”

By Bae Hyun-jung (tellme@heraldcorp.com)