[EDITORIALS]Stop the Loan SharksThe tyranny of loan sharks who offer urgently needed money as bait to entice people into usury is becoming a social issue. Vicious private money-lenders offer money to people at interest rates which are nearly too high to imagine. Later, these private lenders deliberately slip away when the due date for payment approaches so as to continue extracting exorbitant sums of money from borrowers.
Some usurers do not even hesitate to hire a group of thugs to collect their money, creating yet another social problem of organized gangs.
Private lenders registered with the National Tax Office numbered 1,412 at the end of last year. With unlicensed underground lenders included, the number is probably about 3,000 nationwide. The Financial Supervisory Service estimates that the value of the underground loan market is about 20 trillion won ($15.1 billion). Some 20 private money lenders from Japan have also reportedly entered the private money market in Korea.
According to a data released by the Korea Federation of Banks, about 2.3 million persons and companies are delinquent in their borrowing. Another 1 million are on watch lists in connection with recent delinquencies in loan repayments. Therefore, over 3 million persons now have little chance of obtaining loans from mainstream financial institutions.
The flourishing private loan business has inevitably developed from the foreign currency crisis, when interest rates reached double digits. The more delinquent you are in your borrowing, the more trouble you face in getting urgently needed money. Those borrowers end up knocking on the doors of the private money lenders.
Loan sharks are mostly after common people, who have no power in society nor money. Usurious private money lenders take advantage of people's weak points to charge inordinate interest. Annual interest rates of over 1,000 percent on loans are commonplace.
What is worse is that such money lenders routinely threaten debtors and attack them physically. Some loan sharks even sold borrowers to vice racketeers in red-light districts.
These illegal lenders engage openly in crimes like kidnapping, confinement and assault in the absence of measure by the prosecutors and the police.
The government should make stopping this criminal activity its first priority.