55 Days Without a Financial Supervisory Service Chief... Will the Blue House's Poor Personnel Screening Cause Another Delay? (Comprehensive)

[Asia Economy Reporter Kwangho Lee] The leadership vacancy at the Financial Supervisory Service (FSS), often referred to as the "financial prosecutor," is unusually prolonged. With major challenges such as the record-high household debt and cryptocurrency regulations piling up, there are concerns that the Blue House is neglecting the appointment of the FSS chief.

According to the FSS on the 30th, since former FSS chief Yoon Seok-heon stepped down on the 7th of last month, Acting Senior Deputy Governor Kim Geun-ik has been in charge for 55 days as of today. This is the longest vacancy since former chiefs Choi Heung-sik and Kim Ki-sik were appointed within 20 days each.

Until early this month, it was widely expected that the FSS chief appointment would be finalized soon. However, even the speculation has now subsided. The only possibility being discussed is the promotion of Kim Geun-ik, the current acting Senior Deputy Governor of the FSS.

Since the FSS chief is appointed by the President upon the recommendation of the Financial Services Commission (FSC) chairman after a resolution by the FSC, it is known that Chairman Eun Sung-soo has been searching for candidates and reported to the Blue House, but there has been no news so far.

Some speculate that the Blue House may not have the capacity to pay attention to financial sector personnel appointments. Indeed, controversies have arisen over the personnel verification system due to allegations of real estate speculation against former Blue House anti-corruption secretary Kim Ki-pyo and the postponement of the nomination of Park In-ho as the new Air Force Chief of Staff. As problems with the Blue House and government personnel verification system have surfaced, there are concerns that the FSS chief appointment may be further delayed.

Major Challenges Such as Cryptocurrency Regulation and Household Debt Management Pile Up

The problem lies in the changing financial conditions emerging everywhere. With a likely interest rate hike in the second half of the year, concerns over household debt are growing. Moreover, in September, issues such as the expiration of COVID-19 financial support and the enforcement of the Act on Reporting and Using Specified Financial Transaction Information are scheduled, which could impact households and markets.

Especially, middle- and low-credit borrowers who have "Yeongkkeul" (pulling together all resources) and "Debt Investment" (borrowing to invest) could be hit hard, making proactive management and supervision by the FSS crucial at this time.

The comprehensive inspections and sanctions of banks such as Woori Financial Group and Woori Bank, expected in the first half of the year, have also been postponed. The FSS Sanctions Review Committee's meeting on sanctions against Hana Bank, which sold Lime Funds, originally scheduled for the second quarter, has been deferred to next month. Compensation for KIKO, a foreign exchange derivative product in the banking sector, was being pursued through voluntary adjustment following the FSS Subcommittee's recommendation, but lost momentum after former chief Yoon's resignation.

Major tasks such as concluding sanctions related to the private equity fund scandal, cryptocurrency regulation, and the suitability review of major shareholders following financial company mergers and acquisitions (M&A) are also stalled.

With the FSS chief vacancy, there is concern inside and outside the financial sector that the timing for a prompt response may be missed. Although the FSS has stated it will continue operations under the acting system according to regulations, the chief and acting chief are distinctly different, and the absence of a leader inevitably affects operations in some way.

Concerns Over Disruption in Financial Supervision if FSS Chief Vacancy Prolongs

A financial sector official said, "The Blue House seems to prioritize personnel issues of ministries and vice ministers, but if the FSS chief vacancy continues for a long time, there is a risk of disruption in financial supervision work. Considering it is the end of the administration, it seems necessary to appoint a smooth candidate quickly to stabilize the organization."

A financial authority official emphasized, "As the FSS chief vacancy prolongs, internal staff fatigue is increasing and concerns are growing. It is urgent to appoint an FSS chief who understands the internal situation well and can lead the work based on conviction."

Meanwhile, initially, candidates for the next FSS chief included Professor Lee Sang-bok of Sogang University Law School, Professor Won Seung-yeon of Myongji University Business Administration, former Financial Research Institute President Son Sang-ho, Capital Market Research Institute President Park Young-seok, and Professor Park Seon-jong of Soongsil University Law Department, but no appointment news has been heard. Bureaucrats such as Jeong Eun-bo, ambassador for the Korea-US defense cost-sharing talks, former First Vice Minister of Strategy and Finance Kim Yong-beom, and former Blue House civil affairs chief Kim Jong-ho were also considered, but there are reports that they declined the position of FSS chief, which is expected to be a "9-month term" appointment.

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