[비즈한국] Financial Supervisory Service (FSS) Governor Lee Bok-hyun, who has about half a year left in his term, has hit a wall in the aftermath of the emergency martial law. Although there was talk of a "promotion" for Lee around the general election last year, political circles now speculate he will "remain in his post," given that the authority for personnel appointments is effectively vacant. Governor Lee's term ends this coming June. One week after the December 3rd emergency martial law, the Governor carried out a large-scale reshuffle, signaling his intention to solidify his "inner circle" grip on the organization.
Talk of moving to a major position, but...
It is an open secret within and around the Presidential Office that Governor Lee Bok-hyun had desired a "promotion." Rumors circulated that he hoped to head the Presidential Office or another major financial or supervisory institution around the time of the April general election, a move reportedly opposed by key presidential aides and major economic officials. Despite this, throughout the year, various stories flowed through the financial sector, such as, "Governor Lee wants to go to Commission A as chairman," or "He wants to become the head of Bank B."
However, with the December 3rd emergency martial law crisis, Governor Lee encountered the reef of an impeachment political climate. Effectively, the "retention" of Governor Lee, who was President Yoon's trusted confidant in economic circles, has been set in stone. Because most constitutional scholars interpret that an acting president does not hold "active personnel authority," it is highly likely that Governor Lee will serve out his full term before stepping down.
Governor Lee's three-year term ends in early June this year. If the position becomes vacant, Senior Deputy Governor Lee Se-hoon would act as governor. Article 30 of the Act on the Establishment, etc. of Financial Services Commission stipulates that the Deputy Governor shall perform the duties of the Governor in the order determined by the FSS articles of incorporation.
The remaining 6 months: Declaring a return to the "spicy" approach
Naturally, concerns have emerged that the financial policies promoted by Governor Lee might lose momentum. Fully aware of this, Governor Lee drew a firm line when appearing before the National Assembly, stating he "did not know" about the emergency martial law, while internally playing a card to strengthen his control over the organization.
On the 10th of last month, one week after the emergency martial law crisis, the Governor conducted a reshuffle that replaced 74 out of 75 department heads (including bureau directors). Only the Director of the Financial Market Stability Bureau, who monitors market conditions, kept his position. Of the 74 department heads, 36 were new promotions, while 32 of the existing heads were demoted to rank-and-file staff in a sweeping shake-up.
After the announcement, the Governor explained to the press, "I carried out this reshuffle because we need to manage risks over the next six months." In the financial sector, critics pointed to this as a move to "build an inner circle." A financial industry official commented, "There is talk inside the FSS that the Governor is 'overworking his staff,' and the fact that he carried out such a shake-up in his third year might be proof of that internal atmosphere," adding, "It seems he wanted to show who is in charge of the organization during his remaining six months."
Ten days later, on the 20th, the Governor announced that he would delay the release of inspection results for financial holding companies and banks by about a month, emphasizing, "For the remaining six months of my term, the direction of our inspections and supervision will remain strict with a zero-tolerance policy. We will apply an even stronger stance."
To this end, he announced that the inspection results for three financial holdings and banks—NH NongHyup, KB Financial Group105560, and Woori Financial Group316140—which were scheduled to be announced last year, would be released in January. Governor Lee explained, "I thought January was more appropriate (than December) to inform the market and the public in a 'spicy' way as per our principles."
An official at a state-run financial institution predicted, "FSS Governor Lee Bok-hyun is declaring that he will reorganize the institution after the martial law crisis and finish his term according to his original policy," but added, "However, given that the market's view of the FSS may change in connection with the outcome of President Yoon Suk-yeol's impeachment trial, it is questionable whether the FSS can continue to exert a strong presence as it has for the past two years."