Financial reform loses momentum on FSS leadership void

Recent political rows surrounding the chiefs of the Financial Supervisory Service are expected to put the brakes on the Moon Jae-in administration’s ambitious financial reform drive, while leaving the financial regulator struggling in a leadership void.

Speculations, meanwhile, quickly spread Tuesday after the resignation of former lawmaker and civic activist Kim Ki-sik, on who would be the next candidate, and whether Cheong Wa Dae would still take a chance with a non-bureaucrat.

Kim offered to resign from his tumultuous appointment as the FSS head late Monday night right after the National Election Commission ruled he could have broken a law in 2016, when he donated an “unusually large amount” of money to a lawmakers‘ association led by him.

President Moon on Tuesday approved the resignation two weeks after the appointment -- the shortest in the organization’s history.

Kim’s stepping down marked the second FSS head to resign in less than a month after his defamed predecessor Choe Heung-sik, who is a professor-turned-businessman, left over an alleged involvement in employment irregularity.

Upon Kim’s resignation, Yoo Kwang-yeol, the first senior deputy governor, began serving as an acting governor.

The appointment fiasco came amid financial companies‘ scandals related to irregularities in hiring entry-level employees, as well as technical loopholes in issuing “ghost stocks” highlighted after a dividend payment error in Samsung Securities. Moreover, some financial groups were criticized for lack of independence in nominating their chairman.

President Moon’s consecutive choices of figures outside of the financial authorities to helm the FSS were widely considered a strong sign of determination to accelerate financial reform that he had vowed to achieve in his presidential election campaign in 2017. 

Prior to Kim last September, Moon had nominated a former chief executive of Hana Financial Group Choe Heung-sik as chief of FSS. Before Choe‘s inauguration, 10 career bureaucrats served as chief of the FSS since its foundation in 1999.

Choe was seen focusing on reclaiming independency in banking groups’ chairman nomination processes and checking misdeeds in the entry-level employee hiring process.

But amid such efforts, Choe faced growing allegations that he himself was involved in employment misdeeds during his stint in Hana Financial Group. Choe offered to resign in March.

Choe eventually stepped down from the post last month.

Choe‘s successor Kim has been under fire for irregularities during his stint as a lawmaker, including trips sponsored by financial institutions or banks that he had monitored when he was a lawmaker and member of the parliamentary National Policy Committee.

The FSS is an oversight body of domestic banks, insurers, brokerages, asset management firms and more.

It is not recognized as a state-run corporation. The special-purpose institution is under a broader oversight of the Financial Services Commission, based on the Act on the Establishment of the FSC.

By Son Ji-hyoung (consnow@heraldcorp.com)