[Viewpoint] The not-so-invisible handBanks are keeping a low profile after Kang Chung-won withdrew his nomination as chairman of Kookmin Financial Group amid a swirl of controversy.
Other banks have started creeping and crawling, trying to stay off the radar screen of financial authorities.
The government snapped its fingers, and the banks obeyed like newly enlisted soldiers in training. The Financial Services Commission and the Financial Supervisory Service in Yeouido are flustered. They are paying dearly to justify their actions in the KB Financial case every single day. The chairman of the FSC is busy making phone calls to defend himself.
The agency kindly provided a press release stating that it investigated Kang’s chauffeur because there had been allegations that Kang privately used a corporate vehicle for private purposes. Their efforts are pathetic.
It is naive to interpret the KB crisis as the return of government control over banks.
Still, there are so many signs that the Blue House is determined to get involved in this case. It is a bigger issue than the mere nomination of Kang as chairman.
I have talked to high-ranking Blue House officials, and many of them share similar opinions and are now questioning the very existence of the bank.
Just take a look at a sampling of what they’ve said.
On the fact that the case is very controversial: “Finance is too important to be left completely to the corporate world. We have greater experience in dealing with the global financial crisis. We cannot tolerate banks operating freely and getting aid from the public at the same time. President Lee Myung-bak is solid on this point.”
On how the moves to intervene in the financial system look really bad: “It is no time to think of how it looks. Privatization does not mean they are allowed to create a kingdom of their own.”
On how whether we are going back to the time when the government had a heavy hand in finance: “We do not have a certain person in mind for the position. All we did was put the brakes on the appointment of an unfit candidate.”
The Blue House is so fiercely determined on this issue that it has burned bridges.
While contemplating this case, I am reminded of the horror film “I Know What You Did Last Summer.”
Some claim that KB brought government intervention onto itself, pointing to its questionable actions.
Yet, it is not easy to take a side. KB management has been acting too exclusively and unfairly. There’s also a deep-rooted antagonism in Korean society against the banks.
The government, however, is obviously being too rough with KB. We are left with the image of a secret messenger from the Blue House out in the dark of night issuing warnings and collecting resignation letters from executives it sees as unfit to manage.
For its part, the Blue House is determined to face the crisis directly. The Financial Supervisory Service reported that it would conduct a comprehensive evaluation on four major banks every year, and the Blue House approved the high-intensity plan on the spot.
It is easy to forecast how the situation will unfold.
The power of the “invisible hand” was mighty. Because of the national debt, it is hard to expand spending. Also, the interest rate is too low to apply a new financial policy.
Just in time, the banks are starting to act obediently.
However, the last battle is yet to be fought. In the end, it all depends on the people, as the trouble at the stock exchange three months ago illustrated. As the former chairman stepped down, he created quite a stir by revealing that he had been persistently threatened and pressured by the government authority.
Once the government took its hands off the exchange and a trusted candidate was elected as the new chairman by financial companies, the controversy quickly died.
The case involving the next KB chairman could be the same.
If the successor is branded a bygone bureaucrat or a former camp insider, the outcome will be obvious. While Blue House officials claim they are certain about their recent moves regarding KB, their faces do not look so confident. Promising candidates have long been absent within the company, and capable outsiders are reluctant to take the job.
The Blue House’s agony is likely to last. Just as the greed of KB management brought trouble onto the company, the government can end up in a quagmire if it attempts to take control of everything. Many people are keeping silent.
But the dogs that don’t bark are in many cases the ones that we must fear the most.
Now is a good time to take the “invisible hand” off of the private sector. It is perfect timing for the government to step back and let the market and the corporate world do the rest.
*The writer is an editorial writer of the JoongAng Ilbo.
by Lee Cheol-ho