[LETTERS TO THE EDITOR]Hurrah for the ‘bad bank’The government said it will introduce a “bad bank” system to cope with the credit default problem. Some people criticize the measure, saying it will transfer credit defaulter’s burdens to other innocent members of society and that it will create a moral hazard.
But I believe the new measure is the expression of the government’s strong will to solve the serious social and economic problems caused by the credit defaulter issue and it should be carried out.
The number of defaulters has been steadily increasing and has reached four million. Most of them are in their 20s and 30s and they experience difficulties in social and economic activities because of the “defaulter” scarlet letter. Also, because the defaulters are unable to pay their debts back, financial companies are in difficulty as well. Businesses are hesitant to make investments.
Thus, the bad bank system will have to be carried out right away to solve those serious problems.
The bad bank can be successful only when the government and the defaulters cooperate. The government will have to set clear standards for the operation of the bad bank, and defaulters should think of the bank as their last opportunity to regain their lost credit. A true and earnest endeavor from both sides will prevent a moral hazard from arising.
by Shim Pil-seop