[Inside Chodong] Why the Financial Services Commission Should Take Charge of Saemaeul Geumgo

There are cases worse than having too many rowers causing the boat to go off course. It’s when the rowers don’t even bother to row, and the boat remains stuck in the same spot all day long. This is exactly the current situation of Saemaeul Geumgo. The key figures who are "well-known in the region" refuse any interference. Since there are even local district lawmakers who shield them when accidents happen, criticisms like "things need to change" are simply ignored. This is why Saemaeul Geumgo has remained in a blind spot of management until now.

When faced with a bank run crisis, some lawmakers naturally proposed a bill to transfer the supervisory authority of Saemaeul Geumgo to the Financial Services Commission (FSC). The rationale was that the FSC, rather than the Ministry of the Interior and Safety?which lacks financial expertise?should be in charge to manage crises more effectively on a regular basis. However, in reality, the chairman’s will takes precedence over the bill when it comes to deciding "who supervises Saemaeul Geumgo." A senior government official told a reporter, "Just wait three months. The general election is right around the corner. Discussions about transferring supervisory authority will inevitably disappear." The official suggested that when this issue fades from public attention, the Saemaeul Geumgo chairmen will step in, submitting complaints to local lawmakers’ offices demanding that supervisory authority not be handed over to the FSC. Based on long experience, it is predicted that a few such opposing calls will be enough to easily kill the amendment.

According to the Ministry of the Interior and Safety’s website, there are 1,229 Saemaeul Geumgo nationwide as of April 2021. They exist in every city, county, and district. In many cases, there are about ten Saemaeul Geumgo per general election district, such as 30 in Changwon City, 29 in Pohang City, and 26 in Cheongju City. The chairmen of Saemaeul Geumgo are elected by the delegates of the respective Saemaeul Geumgo in the area. The roughly 100 delegates are the chairman’s supporters and essentially his election organization. If a lawmaker falls out of favor with the chairman, it can be a huge loss since votes are crucial. There have even been instances where lawmakers, after receiving Saemaeul Geumgo-related materials from the government to pass on to the media, requested, "You can write the article, but please omit the lawmaker’s name." They know that being named would be detrimental. This alone gives a clue as to which side the balance of power leans toward.

Considering these political backgrounds, it is clear that the FSC should take over supervision of Saemaeul Geumgo. The biggest problem is that while they handle money, they refuse control, resulting in inconsistent soundness regulations among mutual finance institutions. This starts with the standing auditor responsible for internal control. Credit unions must appoint one if their assets exceed 200 billion won, but Saemaeul Geumgo can choose whether or not to appoint one. The same goes for external audits of accounting. Saemaeul Geumgo only needs to undergo an audit every two years for branches with assets over 50 billion won, whereas credit unions must have annual audits if assets exceed 30 billion won. Saemaeul Geumgo’s soundness regulations are relatively lax. Earlier this year, the FSC held a mutual finance policy council to try to eliminate these differences, but no progress was made.

Amid civil servants’ self-deprecating remarks that "Saemaeul Geumgo chairmen do not fear financial authorities but rather ignore them," Saemaeul Geumgo has reached a crisis. Regardless of where the boat is headed, if the rowers are to start rowing, it is right for the FSC to take charge of supervision.

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