BOK Gov. Favors Savings; FSC Head Opts for Property
A Look at Top Officials’ Asset Portfolios Reveals Interesting Patterns
By Kim Tae-gyu
Staff Reporter
Former Bank of Korea (BOK) Governor Lee Seong-tae, who left the bank in March, and his wife hold around 60 percent of their 1.8 billion in assets in bank accounts, brokerage accounts or insurance premiums.
Bank deposits and financial assets also explain about 60 percent of the 1.9 billion in assets of new BOK Governor Kim Choong-soo and his wife as of 2008. Things are similar with many of its deputy governors.
In comparison, senior officials of the Ministry of Land, Transport and Maritime Affairs, which takes charge of the country's construction policies, have a higher proportion in real estate.
Minister Chung Jong-hwan has land or apartments whose total is more than 1.1 billion won. But his bank deposits combined with his wife ― and even his grandchildren ― are less than 50 million won.
The two vice ministers also had more than two thirds of their assets in the form of real estate.
``I do not think that top economic bureaucrats would put their private incentives ahead of the public interests since they are getting to many benefits in just staying in the high position. They would not be tempted to act irresponsibility to get short-term gains. Instead, they can get much as senior bureaucrats of the country,'' economics professor Kim Sang-jo at Hansung University said.
``However, it is potentially a big cause for worry that bureaucrats represent only a small fraction of people and there always exists the danger of moral hazard in the public sector.''
The BOK appears to be relatively free from moral hazard disputes as it kept the benchmark interest rate at a record low 2 percent during the past year to cope with the financial crisis. .
Financial Policymakers
What about Yoon Jeung-hyun, minister of strategy and finance, and Chin Dong-soo, chairman of the Financial Services Commission (FSC)?
The two, who take charge of the country's financial policies, also seem to prefer real estate since they make up a majority of assets for both. Yoon's assets depreciated by 187.7 million won over the past year, but those of Chin rose by 71.7 million won.
Despite their asset portfolio, both have worked hard to curb inflationary pressure in property prices affected by rich liquidity ― a result of generous stimulus packages in the aftermath of the financial distress.
In particular, Chin has spearheaded a variety of anti-speculation policies ever since he took the helm of the financial policymaker in early 2009.
Under Chin's stewardship, the FSC has strengthened anti-speculative regulations such as the loan-to-value ratio (LTV) and the debt-to-income ratio (DTI) last year and has no immediate plan to ease them.
The former alludes to a percentage of the outstanding debt on real estate to its market value, while the latter measures what portion of a homeowner's monthly income is used to pay off debts.
The two regulations prevent banks or other financial entities from offering mortgages to those who fail to meet the requirements, thus reducing demand for real estate as well as inflationary pressure.