[People人] DLF, Lime, COVID-19, Conflict Rumors... Eun Seong-su, Financial Services Commission Chairman, Rushes to Resolve Crisis

Yoon Seok-heon, Financial Supervisory Service Chief, Communicates and Empathizes
"Failure and Innovation Are Twins"
Emphasizes 'Innovation' Quoting Bezos

Eun Sung-soo, Chairman of the Financial Services Commission, is announcing the '2020 Financial Services Commission Work Plan' on the 19th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Jin-hyung Kang aymsdream@

[Asia Economy Reporter Kangwook Cho] From the overseas interest rate-linked derivative-linked funds (DLF) and Lime Asset Management incidents to the novel coronavirus disease (COVID-19) crisis. These are a series of events that occurred within less than a year since Eun Sung-soo’s appointment as Chairman of the Financial Services Commission (FSC). Currently, Chairman Eun is spending his days running around tirelessly to resolve these issues. This week alone, starting with the '2020 New Year Work Report' on the 17th, he will attend the Cabinet meeting on the 18th, and on the 19th, he will hold a briefing to directly explain the FSC’s work plan for this year to the media. Following this, regular FSC meetings and the National Assembly’s Political Affairs Committee plenary session are scheduled.

Even before the launch of the Eun Sung-soo administration, there were concerns that hidden obstacles lurked everywhere. Since before his inauguration in September last year, the entire financial sector was troubled by the DLF incident, and the suspension of redemptions of Lime Asset Management’s private equity funds struck the financial industry hard, forecasting a prolonged resolution process throughout this year. Moreover, due to COVID-19, measures to support small and medium-sized enterprises, including small business owners and self-employed individuals, had to be prepared, making his days extremely busy. However, recently, even rumors of conflict with the Financial Supervisory Service (FSS), with which the closest cooperative relationship should be maintained, have surfaced. This is a reason why Chairman Eun’s concerns have deepened.

The ongoing rumors of conflict between the FSC and the FSS stem from the FSS’s disciplinary decisions related to the DLF incident. The FSS decided to impose severe sanctions on the CEOs of banks that sold DLFs by applying the Corporate Governance Act, which critics say narrowed the FSC’s room for maneuver. There has also been growing controversy over whether there is sufficient legal basis to impose sanctions under the Corporate Governance Act. If the Capital Markets Act were applied instead, the FSC would have the authority to finalize the decision. Because of this, questions arose whether the FSS’s aggressive application of the Corporate Governance Act was intended to 'pass over' the FSC, causing discomfort within the FSC. As a result, the FSC’s authority has been curtailed, and the FSC appears to be left to clean up after the FSS.

In particular, the FSC’s change in attitude toward the reappointment of Sohn Tae-seung, Chairman of Woori Financial Group, has amplified these suspicions. In December last year, before the DLF disciplinary hearing, the FSC supported Sohn’s reappointment, stating, "We respect the board’s judgment." Then, shortly after the FSS’s decision to impose severe sanctions earlier this year, the FSC said, "There is no disagreement with the FSS regarding the disciplinary hearing decision." However, it added, "The FSC will decide on matters within its jurisdiction, and the FSS will make judgments according to the standards and procedures prescribed by law," leaving some ambiguity. This has been interpreted to mean that while the severe sanctions are within the FSS’s legitimate authority, the FSS must also bear corresponding responsibility since it made the decision independently. Chairman Eun’s recent remark on criticisms that the FSS’s authority is excessive?"If there is further discussion on what is appropriate, I will consider it"?supports this interpretation.

Another factor supporting the conflict rumors is that the FSS’s executive personnel appointments have been delayed by nearly two months compared to previous years. The appointment authority for the FSS’s deputy governor lies with the FSC chairman. Typically, the FSS governor recommends candidates to the FSC chairman, who then adjusts and finalizes appointments. However, disagreements between the FSC and FSS over whether to retain Deputy Governor Won Seung-yeon have reportedly caused delays in executive appointments.

Chairman Eun has actively worked to dispel conflict rumors, stating, "The FSS is a good partner, and there is no conflict." Especially after the recent announcement of financial support measures due to COVID-19, when questions about the conflict rumors poured in, he said, "What does it matter to the general public whether the FSS bypassed the FSC or not?" He expressed regret that such rumors arise when urgent financial support efforts should be the priority.

Chairman Eun is regarded as having a friendly and gentle personality. He is also well known for his meticulous work style and candid speaking manner. When the tone of his remarks during a Q&A session became intense and someone informed him that a broadcast camera was filming, he responded, "Whether they film or not," focusing solely on conveying his message. Notably, after events he attends, he always takes time to answer questions from waiting reporters. There is an anecdote that while hurrying to his next schedule, he half-entered a car but came back out to respond to media questions, causing his aides some anxiety. This is quite different from other financial or government leaders who tend to keep quiet and leave events quickly.

Shortly after his inauguration, Chairman Eun visited the FSS in person and discussed communication with FSS Governor Yoon Seok-heon. This was the first time in four years since March 2015 that a FSC chairman visited the FSS directly, when then-Chairman Lim Jong-ryong met then-Governor Jin Woong-seop.

In his New Year’s address, Chairman Eun emphasized 'innovation' by quoting Amazon CEO Jeff Bezos’s words that "failure and innovation are twins" and that Amazon is believed not as the most successful company but as "the company where it is easiest to fail." He pledged to prepare effective reforms to the exemption system to create a culture that tolerates and supports employees of financial companies facing bankruptcy of funded enterprises, provided they act honestly and without fraud. Having taken office in the second half of last year, this year marks the real beginning for Chairman Eun. His commitment to creating a leap forward for the Korean economy through innovative financial leadership is a reason for high expectations.

This content was produced with the assistance of AI translation services.