[Reporter’s Notebook] Ko Seungbeom’s 'Gray Rhino'... The FSC Leaning on Political Logic

In 2006, Byeon Yang-ho, former Director of the Financial Policy Bureau at the Ministry of Finance and Economy, was arrested and indicted. He was accused of selling Korea Exchange Bank at a low price to the US-based private equity firm Lone Star in 2003. Although he was later found not guilty, the ‘Byeon Yang-ho Syndrome’ spread throughout the public service, discouraging officials from taking responsibility. Bureaucrats who once took the lead in making decisions for the nation and its people disappeared.

The recent situation in financial authorities seems to be no different. The Financial Services Commission (FSC) has decided to extend the ‘loan maturity extension and interest repayment deferral’ measures for small business owners and self-employed individuals. This is the fourth extension since it began in April 2020.

The FSC has repeatedly promised a ‘orderly normalization’ due to criticism that it was covering up and nurturing bad debts. Chairman Ko Seung-beom of the FSC also added a caveat just a month ago on the 19th of last month, stating, "We will make a decision by comprehensively considering the COVID-19 quarantine situation and the monitoring results of financial soundness until the end date," but he also said, "The principle is to end the maturity extension and repayment deferral measures by the end of March."

The principle set by the head of the financial authorities was overturned like flipping a hand in response to political logic. On the 21st, the National Assembly, through bipartisan agreement, passed the ‘Supplementary Budget for Small Business Owners and Quarantine Support’ and issued a supplementary opinion urging to "promptly prepare measures to further extend the deferral measures." In response, the FSC immediately released a press reference stating, "We plan to prepare additional extension measures for the maturity extension and repayment deferral by comprehensively considering the intent of the supplementary opinion and the quarantine situation."

It is not about questioning whether extending financial support measures is essential amid the rampant COVID-19 situation. The FSC repeatedly cited ‘bipartisan agreement’ as the reason for the additional extension in its materials. Naturally, the political sphere, thinking about votes ahead of the presidential election, cannot help but demand further extensions. The problem lies in the FSC’s stance of announcing extension measures as if waiting for such political voices.

The FSC is not a political group. It is a body composed of the most ‘financially savvy’ experts. If the extension of financial support measures became necessary, they should have stated their position earlier with evidence and statistics. If there were concerns about insolvency and soundness despite COVID-19, they should have resolutely pursued normalization despite political pressure. The reason the state grants the FSC fairness, transparency, and independence by law is a request and command not to be swayed by external interference.

If the financial authorities fail to take the lead, the entire financial industry will be shaken. The FSC cannot be unaware of the warnings poured out by banks and experts every time financial support measures are extended, expressing concerns about insolvency. Chairman Ko himself mentioned the gray rhino (a predictable but neglected risk) directly a few weeks ago. You cannot stop a fearsomely charging gray rhino by relying on political logic.

After the incident, former Director Byeon expressed concern in an interview with the media, saying, "The juniors seem to be too cautious." This worry stems from the fear that public officials cannot do anything if they are afraid of criticism. Being a good bureaucrat does not mean avoiding criticism. It is urgently necessary to take the lead, speak out, and implement necessary policies even if it means walking a rough and thorny path.

Reporter Song Seung-seop tmdtjq8506@

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