Greedy and immoral

Greedy and immoral

Public trust in financial industry hits rock bottom Here is one more reason Koreans should attend colleges at all cost: banks charge far higher lending rates to high-school graduates. As snobbish and despicable as this practice of credentialism in making decisions about loans is, it is but one of many diverse malpractices, ranging from the unethical to the downright illegal, used by Korea’s largest banks to squeeze their clients and maximize profits. KB Kookmin Bank, for instance, advanced loans’ maturity without obtaining consent from borrowers by falsifying expiry dates. The nation’s largest bank says its forgery of documents was to ``save clients’ trouble.” The No. 2 Shinhan Bank, which gave four times higher credit points to degree holders than to high-school graduates, excuses itself by offering that it was a ``new but short-lived experiment” in deciding borrowers’ credit grades. Financial consumers have long wondered, and complained, why the banks don’t lower lending rates even if the Bank of Korea reduces its benchmark interest rate. As it turned out, the branch heads of banks arbitrarily raised the spread on borrowers with poor credit records to keep the central bank’s move from denting their bottom lines. Finally, the nation’s nine major banks and 10 brokerage houses are suspected of colluding to rig the rates on certificates of deposit (CDs), the basis for a variety of loans, in the Korean version of the ``Libor con.” These licensed fraudsters and modern-day Shylocks must have completely forgotten why people call them financial ``institutions” instead of companies and use the expression of ``extending credit” instead of lending money. Public duty and credibility are two pillars of the financial industry, but can no longer be seen in Korea’s financial sector today, in which the only ``P-word” they are concerned about is profitability. This also explains why financial regulators have been looking the other way while the banks, brokerages and underwriters were making all these irregularities. Little wonder then that it was neither the Financial Services Commission nor the Financial Supervisory Service but the Board of Audit and Inspection that ferreted out the domestic industry’s unlawful and unethical business practices. These regulating agencies, which live on fees paid by these financial service firms, didn’t mind who’s scalping whom as long as they remain healthy, not morally but financially. At a time when economists at home and abroad warn against the danger of Korea’s snowballing household debts, the bankers and regulators alike were busy increasing the burden on debtors while lining their pockets. And by the year’s end, they will be celebrating another year of record revenue by throwing big bonus parties. The greed and immorality of the financial industry seems to have become a universal phenomenon. But that should be no reason for law enforcement authorities here to sit idle. Irresponsible risk taking and the undue pursuit of bonuses are one thing, rigging interest rates is quite another. The financial authorities must get to the bottom of the CD rate-manipulation scandal and mete out due justice. It’s long past time for the nation to also come up with legislation to make it easier for people to file class actions and drastically enhance the role of an agency to protect financial consumers. Reregulation, not deregulation, is the keyword now.