Good morning, fellow Koreans,

I am now in New York as you listen to this radio address. During my stay here, I am scheduled to attend a Summit on Climate Change at the United Nations and deliver a speech at the UN General Assembly. After that, I will attend the G20 Summit in Pittsburgh to engage in discussions on how to cope with the financial crisis. I pledge to keep in mind the interests of Korea and enhance the nation’s status overseas.

Today, I would like to begin with a story about a woman I met when I visited the Finance Consumer Service Center this April. She told me that she was running a small snack bar in Daegu city and borrowed one million won through a private loan three years ago to pay her children’s college tuitions.

She went on to say, “At first, I tried hard to borrow some money from banks, but to no avail. Then, I turned my eyes to non-bank financial institutions and even venture capital finance companies. I really needed money to pay the college tuition of my children and just to get by. Eventually, I had to borrow some money from a consumer loan company. I borrowed one million won at first and then again two million, but their interest rate was almost as high as 60 percent. Worse yet, when I was unable to pay the interest on time, I was pestered by tons of calls from the loaner. I reluctantly ended up resorting to a private moneylender to pay them back.”

I was told that she had to repay 20,000 won a day in the principal and interest. It must have been very tough for her to do that just by selling cheap seaweed rice rolls. She could not live but by paying one credit card with another and then with another and so on. In doing so, her debt mounted to 15 million won in just three years. By the time I met her, the monthly interest she was paying topped even the amount of principal. She complained that she was being harassed by debt collectors so much so that she was even losing her hair.

She asked to me to do something about the current system so that banks can lend money to people like her with lower interest rates than private loans. In response to her request, I told relevant officials to help her take out an unsecured loan with a low interest rate. She would have a chance to repay the principal and interest on her private loan according to an interest rate set by law.

She later sent me a thank you letter saying, “I will continue to work hard and will also help others in need.”

There are many low-income people like her who are in great distress just because they are not able to get the little cash they need. More than eight million people are denied bank loans because of a lack of credit. Among them, about 1.9 million people are forced to take out high-interest private loans.

Last week, the Government announced a new microfinance program that provides loans without collateral for low-income families. The new program is intended to provide low-interest loans to those who are struggling to stand on their own feet. Overseas, this sort of program is called a microcredit bank. 

Loans with a lower interest rate than those of commercial banks will be of great help to low-income families who previously had to resort to the private money market and pay high interest, won’t they? This sort of unsecured loan program was a policy that was first carried out when I was the Mayor of Seoul.

In the summer 2005, four members of a family jumped off a Han-gang river bridge. Only the mother and daughter were saved. Struggling to finance their business, they had to shoulder snow-balling debts. In the end, their whole assets were seized, which forced them to make such a desperate decision.

The news came as a great shock to me. Thus, Seoul Metropolitan Government decided to offer long-term, low-interest loans worth around 1 trillion won for the financially-strapped microbusiness owners and self-employed people. I was very pleased to hear many of the beneficiaries of the program report that they could make a turnaround thanks to the program. 

During my presidential election campaign, this program became one of my pledges. Accordingly, I set up the Microfinance Foundation by utilizing dormant accounts from banks in April last year.

The situation facing large and medium businesses is showing signs of improvements driven by the recent economic recovery. However, low-income families who suffered the most from the economic crisis still face a severe situation. 

Against this backdrop, the Government is placing top priority on policies aimed at creating many new jobs and helping out those who are in desperate need. Thus, the new microcredit program was devised in a bid to give support to low-income families.

To provide low-interest loans to those who are making efforts to stand on their own feet and, thus, encourage them to start anew constitutes the core of the Government’s centrist pragmatic policy for low-income families.

The program will get started with a fund of two trillion won; one trillion won from dormant deposits and contributions from financial institutions and another one trillion from voluntary contributions from businesses. This program is the largest government-sponsored assistance policy for low-income people in history.

It is noteworthy that major corporations are donating 1 trillion won directly in the loan program for the first time. The big businesses’ involvement in the financing of very small businesses represents a fine example of fulfilling their social responsibility.

The microcredit program was initiated with the intention of serving and sharing with underprivileged people. I expect that the program will act as a catalyst for spreading the spirit of love, sharing, thankfulness and harmony throughout our society.

I hope many volunteers will participate in operating some 300 branch offices of the microcredit bank nationwide. I urge retired financial specialists and young people to join in the project as volunteers. In this way, the young participants in particular will gain the experience to be entrusted with more important responsibilities in the future.

Fellow Koreans,

Along with daily living costs, average citizens are concerned about the problem of housing and education. Recently, the Government announced the Bogeumjari project which is aimed at solving the housing difficulties facing low-income families. The project revolves around a plan to provide urban housing units that are much cheaper than those in adjacent areas. The plan eyes the construction of many affordable rental and long-term lease units so that the tenants would be able to live in them for life at an affordable cost.

The new tuition loan program, too, is geared to lessen the financial burden as it allows students to repay their school loans after they get a job. The program represents a great relief for parents because the loan is not due until after the student begins to earn money.

An old axiom says, “Heaven helps those who help themselves.” The Government will help those citizens who strive to stand on their own feet. I emphasize again that, in a nutshell, this is my Administration’s policy for low-income families.

As the weather is turning cooler, I am concerned about the health of every one of you, particularly because of the threat of swine flu. As a precautionary measure, I would advise you to wash your hands often. If you do not feel well, see a doctor without delay.

I expect to reap good results during my week-long stay in the United States and will report them back to you when I return home.

Thank you very much.