South Korea’s divisive parliament is in rare agreement that something has to be done to stop loan sharks from preying on a million desperate borrowers.
The global economic crisis has been a boon for private lending firms that operate outside the banking system. By law they can charge 49 percent interest per annum but many demand far more.
Members of parliament have proposed laws that would cut the interest rates private lenders can charge and push the criminal segment out of the sector.
Most money is lent by a few firms, operating within the law and advertising fast cash on TV.
But there are thousands of small lenders operating on the fringes of the law that target people desperate for money.
The latest worries come as household debt is rising in South Korea, hitting 661.51 trillion won (US$536.2 billion) at the end of June, equal to 65 percent of GDP.
“Households are spending more than they earn and their ability to pay off debt is weak. If interest rates rise and debt grows, this will pose problems for the economy,” said Jeong Young-sik at Samsung Economic Research Institute.
The amount owed to private lenders is relatively small, but lawmakers are worried about the wider social costs. Only about 5 percent of South Koreans use private lenders.
But the government financial regulator, the Financial Services Commission (FSC), said they account for about 85 percent of the country’s troubled debtors who are seriously behind in payments or on the brink of bankruptcy.
The typical loan made by the some 16,000 private lenders is for a few thousand dollars for household expenses or to start up a small business, the commission said.
The FSC launched its own crackdown in April and said it would start a 3 trillion won fund to provide low-interest loans for people who would typically borrow from private lenders.
It forced about 1,000 lenders out of business.
Laws before parliament would lower the ceiling for rates to about 30 percent for non-secured loans and increase fines and punishments for those caught violating the law.
Earlier this year, South Korean media was saturated with the story of a young women who borrowed about US$2,500 to pay college tuition and was slapped with illegal fees that put her interest rate at nearly 350 percent, forcing her to take out another loan.
The lender then forced the woman into prostitution to pay off her debt. Her father was dragged into the mess and also fell into debt. He ended up killing his daughter and committing suicide.
Asian perspectives of the US have shifted from a country once perceived as a force of “moral legitimacy” to something akin to “a landlord seeking rent,” Singaporean Minister for Defence Ng Eng Hen (黃永宏) said on the sidelines of an international security meeting. Ng said in a round-table discussion at the Munich Security Conference in Germany that assumptions undertaken in the years after the end of World War II have fundamentally changed. One example is that from the time of former US president John F. Kennedy’s inaugural address more than 60 years ago, the image of the US was of a country
‘UNUSUAL EVENT’: The Australian defense minister said that the Chinese navy task group was entitled to be where it was, but Australia would be watching it closely The Australian and New Zealand militaries were monitoring three Chinese warships moving unusually far south along Australia’s east coast on an unknown mission, officials said yesterday. The Australian government a week ago said that the warships had traveled through Southeast Asia and the Coral Sea, and were approaching northeast Australia. Australian Minister for Defence Richard Marles yesterday said that the Chinese ships — the Hengyang naval frigate, the Zunyi cruiser and the Weishanhu replenishment vessel — were “off the east coast of Australia.” Defense officials did not respond to a request for comment on a Financial Times report that the task group from
BLIND COST CUTTING: A DOGE push to lay off 2,000 energy department workers resulted in hundreds of staff at a nuclear security agency being fired — then ‘unfired’ US President Donald Trump’s administration has halted the firings of hundreds of federal employees who were tasked with working on the nation’s nuclear weapons programs, in an about-face that has left workers confused and experts cautioning that the Department of Government Efficiency’s (DOGE’s) blind cost cutting would put communities at risk. Three US officials who spoke to The Associated Press said up to 350 employees at the National Nuclear Security Administration (NNSA) were abruptly laid off late on Thursday, with some losing access to e-mail before they’d learned they were fired, only to try to enter their offices on Friday morning
CONFIDENT ON DEAL: ‘Ukraine wants a seat at the table, but wouldn’t the people of Ukraine have a say? It’s been a long time since an election, the US president said US President Donald Trump on Tuesday criticized Ukrainian President Volodymyr Zelenskiy and added that he was more confident of a deal to end the war after US-Russia talks. Trump increased pressure on Zelenskiy to hold elections and chided him for complaining about being frozen out of talks in Saudi Arabia. The US president also suggested that he could meet Russian President Vladimir Putin before the end of the month as Washington overhauls its stance toward Russia. “I’m very disappointed, I hear that they’re upset about not having a seat,” Trump told reporters at his Mar-a-Lago resort in Florida when asked about the Ukrainian
RSS