Leadership changes come as long-debated organizational overhaul remains in limbo

(Herald DB)
(Herald DB)

Although the Lee Jae Myung administration has appointed new heads of South Korea’s top financial regulators, it has yet to finalize its long-anticipated plan to reorganize these institutions.

On Wednesday, the presidential office nominated former First Vice Finance Minister Lee Eog-weon to lead the Financial Services Commission, filling a post that has been vacant since Chairman Kim Byoung-hwan offered to resign in May.

When asked why the presidential office appointed a new FSC chairman despite the ongoing debate over its restructuring, presidential Chief of Staff Kang Hoon-sik said that “all possibilities remain open.” He explained that since the overhaul plan has not been finalized and the FSC is still functioning, filling the leadership post was a natural step.

Later in the day, the FSC held a meeting and decided to recommend Lee Chan-jin, who was a member of the State Affairs Planning Committee, as the new governor of the Financial Supervisory Service, another key financial regulator. The FSC chairman has the right to recommend the FSS governor, and the president later finalizes the appointment without an audit.

The position has remained vacant for the past two months since former FSS Governor Lee Bok-hyun’s term ended in June.

The nominations come amid an uncertain outlook for the reorganization of the financial oversight bodies. At Wednesday’s public briefing, the State Affairs Planning Committee did not unveil its reorganization plan.

It was widely expected that the Financial Services Commission’s policy functions would be transferred to the Ministry of Economy and Finance, while its supervisory role would be merged with the Financial Supervisory Service — a move that would elevate the agency to a commission. Under this plan, the FSC would effectively be dismantled.

President Lee, however, has been publicly praising the FSC on multiple occasions. Last month, Kwon Dae-young, the former secretary general of the FSC who was lauded by Lee for overseeing new mortgage lending restrictions that were imposed on June 27, was even appointed FSC vice chair, fueling further speculation about the agency's future.

The recent string of nominations adds weight to the view that the expected overhaul of the financial regulators could go in a different direction.

Meanwhile, the FSC has been working to strengthen its presence as the country’s top financial regulator.

While hosting a series of meetings within financial circles to assert its presence, the FSC held an unplanned briefing on Monday to announce the implementation of a debt forgiveness policy. Considering that the regulator rarely holds such unscheduled briefings, the move was widely seen as a deliberate effort to signal its influence.

Amid the prolonged uncertainty, political circles expect the Lee administration to tackle the reform plan after the Korea-US summit, which is slated to take place on Aug. 25.


silverstar@heraldcorp.com