Disappointing remarksThe Financial Services Commission wields extraordinary power over the financial market, as it can serve as prosecutor or judge to restore order in the industry.
The newly appointed head of the FSC, Kim Seok-dong, must therefore be careful when speaking publicly because observers put a lot of weight on his every word.
The chairman’s recent hard-line tone raises concern over the possibility of greater government interference in industry and market affairs. Kim, who previously served as a vice finance minister, said that he will aim to strengthen the commission so that it can take an even bigger role in reinstating order and discipline in the country’s financial markets.
This type of comment is in line with previous statements by Kim that the government exists in order to govern and that it must accomplish policy goals even if it has to twist arms in the private sector.
The market is already swaying from his appointment and his inaugural words, which give us some cause for concern. No bureaucrat can be blamed for being too passionate about his or her job. But this particular position requires someone who is fair and cool-headed.
If the Financial Services Commission had done its job correctly, the controversy over the merger between Hyundai Engineering & Construction and Hyundai Group could have been avoided.
The problems developed not because the watchdog was overly aggressive and interfered too much, but rather because it failed to set guidelines for the deal.
The commission’s primary role, after all, is to establish rules and then seek to ensure that market players follow them.
The government should know what it is supposed to do and what it’s not. It must make sure that it does not cross boundaries with the private sector and that it refrains from engaging in meddling behavior.
The commission was created to supervise and, more importantly, set policies. But it has been negligent in the latter task, failing to develop an outline for industrial development in this country.
Despite its promise to privatize the state-run Korea Development Bank, it has been a turning blind eye to the company’s lax management.
The commission also must address sky-high household debt and the insolvency issues facing savings banks. The FSC must set its priorities straight quickly.