Crucial Assembly Financial HearingsThe Korea Deposit Insurance Corporation has lost more than 12 trillion won in public funds as a result of capital reductions by local financial institutions, which the state-run organization infused with 36 trillion won to help them recapitalize. Furthermore, it suffered another two trillion won in losses from stock investing, bringing total losses of public funds by the corporation to 14 trillion won. That is mostly taxpayers'' money.
Shrugging off concerns that public funds have been mismanaged and most are unlikely to be recouped, the government said it believes it can recover 70 percent of the amount it invested even though less than 30 percent of compensation payment for depositors are currently recoverable. The government pins its hope on a recovery of funds for capital increases can be recovered in line with a hike in share prices of local financial institutions when their operation return to normal.
We cannot rule out the possibility that the invested public funds will be recovered after an additional 50 trillion won is pumped into the financial sector. So we cannot stress enough the importance of Monday''s National Assembly''s hearings on the use of public funds.
The hearings should clarify who is responsible for making policies, for implementing those policies, for supervising and managing the public funds. The corporation appears to be in charge, but in reality it is only an errand boy. Then who should take the blame: the head of the Financial Supervisory Service, the finance minister or the Blue House secretary for economic affairs? The hearings should make the public aware of how failed financial institutions are liquidated, on what basis public funds are supplied and of how much the government has lost and is due to lose. This will be the only way for us to know how much debt we will pass along to our descendants and what we should do in order to minimize those liabilities. The hearings should investigate the past for the sake of better future.
Without an explanation of how much the government will be able to collect and whether it really cares about the losses, we can not judge if the government''s plans for another 50 trillion won to rescue the financial system is a good use or a waste of our money.
by Chung Moo-sung