Lawmakers slammed for Busan bailout bill

Parties are embroiled in a heated debate over a revision bill submitted by Busan lawmakers to offer full compensation to depositors of suspended savings banks.

Many say the bill is legally inappropriate, saying that full compensation may cause moral hazard.

A dozen Busan lawmakers have submitted the revision bill which will obligate the government to fully compensate for deposits and subordinate bonds of the troubled lenders.

The bill, if passed by the assembly in June, is to take retroactive effect, and apply to all account holders who have so far suffered from the suspension of operation.

A total of 4,900 account holders are estimated to have 990 billion won in unrecoverable deposits in eight suspended savings banks nationwide, according to Rep. Lee Jin-bok of the GNP.

“The submitted bill is a mockery of the parliamentary legislative rights as it is no more than a mere gesture to appease the savings banks’ victims,” said a member of the main opposition Democratic Party’s Supreme Council.

Lee Hoi-chang, leader of the minority Liberty Forward Party, also demanded that the bill be withdrawn.

“The bill based on populist impulses unduly suggests that taxes be spent for the sake of a certain group,” said the former judge.

The minority Democratic Labor Party, too, said in a statement that the revision bill was not only unrealistic but also threatened the financial order of Korean society.

The presidential office, Cheong Wa Dae, though it has refrained from making its official stance over the issue, said the bill is to undergo further parliamentary discussion.

The revision bill is to be submitted to a National Assembly committee in the June plenary session.

The Busan lawmakers’ group, however, have adhered to their bill.

“Strong measures are needed to settle the public anger in Busan and to protect the rights of those victimized by economic irregularities,” they said in a statement.

They also claimed that it would be impossible to win support from Busan voters without taking a firm step on the savings banks scandal.

The Busan Savings Bank, along with seven others, was suspended for six months in February.

Under the present law, the maximum withdrawal amount for depositors after suspension is 50 million won ($46,781).

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