We need thorough reformWe cannot emphasize enough the importance of responsible financial oversight. To advance the financial industry in this country, authorities should ease precursory barriers but more importantly strengthen surveillance to prevent more crises.
It is an established fact that poor oversight in the United States contributed to the 2008 financial crisis. Slack financial oversight is also blamed for the debacle involving Busan Savings Bank Group.
The government has launched a task force to spearhead a sweeping overhaul of financial supervision. It should be coming up with a way to ward off risk and stamp out crises.
Illegalities and corruption came to be in Busan Savings Bank largely due to a failed supervisory system.
The Financial Supervisory Service was faulty in operation and policy. It yielded unchecked and omnipotent power. The task force should seek ways to balance the FSS’ elephantine power to root out shady relations between bureaucrats and industry.
Other authoritative state organs such as the Korea Depositary Insurance Corp. and the Bank of Korea could be bestowed with keeping a check on problematic financial institutions. Or as in Australia’s case, the FSS’ role should be limited to supervising without the authority to approve business licenses and engage in punitive action.
We could also take a page from the U.S.’s playbook, where independent consumer financial protection keeps the FSS’ watch over the industry in check. But redundancy oversight could disrupt and delay financial operation. The U.S. has a financial supervisory council to coordinate inspections and share information.
The loopholes that breed corruption among bureaucrats and industry should also be fixed.
Bureaucrats should be barred from entering the private sector for higher pay or post-retirement security. The organization system of placing elite employees in the primary banking sector should also be modified by obligating job rotation.
The supervisory system cannot be fixed merely by restructuring the FSS.
The higher Financial Supervisory Commission is also accountable and possesses poor supervisory policy and guidance. We hope the government concocts thorough reforms so that this will be the last time we see such a financial disaster and losses deriving from poor governance.