A top government financial regulator on Monday expressed his concern about public criticism of the financial supervisory authorities following a series of scandals.
Speaking at a meeting with reporters, Financial Services Commission Chairman Kim Seok-dong admitted his responsibility for the bribery scandals at the Financial Supervisory Service, an executive arm of the FSC.
“I, as the chief regulator, feel heavily responsible for the recent incidents,” he said.
But Kim indicated that he hoped the situation would be resolved as soon as possible, saying, “Due to vague anxiety (from a variety of rumors and allegations), the market has faced an extremely vulnerable situation.”
He cited negative factors and uncertainties at home and abroad and called for quick normalization of the regulatory authorities.
“Should the regulatory authorities fail to carry out its normal functions, there is no future for the nation’s financial industry.”
His comments seemed to suggest that the FSS has been having difficulty conducting its regular oversight of financial companies as the prosecution is widening its investigation into more regulatory officials.
“FSS staff have been panicked by the heavier burden for tasks including handling of savings banks whose operations were suspended,” he said.
The FSC chief also said taking advantage of the current woes, the regulatory authorities would make every effort to prevent similar cases from occurring.
Concerning the debates on the FSS’s exclusive right to probe financial companies, he said it is undesirable for the nation to offer independent investigative authority to any agency demanding the right.
In the wake of the FSS-savings banking scandal and supervision failure, more and more critics argue that the Bank of Korea and the Korea Deposit Insurance Corp. should also have the right to probe the financial sector.
The recent irregularities include allegations that several FSS staff took kickbacks from debt-ridden savings banks and the regulator’s failure in oversight of the secondary banking sector.
It was FSC Chairman Kim who initiated restructuring of the secondary banking industry by suspending operations of eight savings banks immediately after taking office last January.
The irregularities occurred several days before the financially distressed Busan Savings Bank had its operations halted.
The FSC failed to prevent leaks about its plans to suspend banks. As a result, VIP customers ― reportedly including major shareholders of the savings bank ― withdrew their deposits before the suspension.
Meanwhile, Kim also said he would speed up moves to finalize the regulatory inquiry into U.S. Lone Star Funds on whether the U.S. investor was legally eligible to purchase Korea Exchange Bank in 2003.
He clarified that endorsement or rejection of Hana Financial Group’s plan to acquire KEB would not precede the FSC’s review on the fund’s eligibility as the biggest shareholder.
By Kim Yon-se (firstname.lastname@example.org