Financial reforms go strayA ruling party lawmaker asked Minister of Strategy and Finance Choi Kyung-hwan at a parliamentary audit to clarify the priority between assisting businesses and households or invigorating the financial industry. The Finance Ministry was also asked to lead financial reform instead of financial authorities.
“How can the one who created the problems fix them properly?” the lawmaker asked.
Since then, Vice Minister Choi has come forward and criticized inflexible operations and the wage system in banks: “Why do banks close at 4 p.m.? ... Many employees are paid hundreds of millions won in salary without doing much work.”
So the Saenuri Party launched a financial reform task force and held the first meeting on Oct. 21.
The basic goal is to make financial institutions approachable, convenient and trustworthy.
Politicians’ complaints can be summed up as a lack of any real feeling for reform. The public cannot see any tangible changes. The argument by financial authorities is that the focus of the reform has been on improving the regulations and expanding autonomy. When competition is revitalized, consumers will benefit and the financial industry’s competitiveness will be enhanced. It is a fundamental prescription, yet an approach that requires patience. The authorities need to shake off the temptation of control, and financial firms need to take risks and get involved in the competition. When the government takes its hands off the price, consumers may immediately feel burdened. So there were concerns internally.
Financial Services Commission Chairman Yim Jong-yong said, “Never, ever give up regulatory reform.” Symbolic measures followed.
Most notably, the policy of pressuring banks to increase loans to small and midsize venture companies by ranking banks by “technology financing” performance was retracted.
But when politicians raise their voices, the position of financial authorities is shaky at best.
On Oct. 20, Yim said that financial companies will be reviewed and controlled.
He used expressions like “power trip” and “precision strike.” However, there are concerns that the framework of financial reform could be undermined. One bank executive argued that what politicians mean by “tangible reform measures” is beating on banks to increase loans and the lower interest rate and fees before the April election.
At this rate, restructuring zombie companies is a long gone notion, he said.
It would be great if more men on the boat would work to make financial reform progress faster. But they have to pull on the oars in the same direction. If they paddle in a different direction out of anxiety and nervousness, the reforms will be lost.
JoongAng Ilbo, Oct. 22, Page 33
*The author is a business news writer for the JoongAng Ilbo.