Oh Young-jin is The Korea Times' publisher and president. He began to work at The Korea Times in 1988 as a sports writer. Then, he worked as a reporter and later as editor at the City Desk, Business Desk and Politics Desk. He worked as chief editorial writer before taking the current position. He has a keen interest in politics as well as defense affairs.
FSC chief - regulator with compassion
FSC Chairman Kim Seok-dong talks to Business Focus at his office in Yeouido, Seoul, on Oct. 4. / Korea Times photo by Shim Hyun-chul
By Oh Young-jin
By Oh Young-jin
Ask Citibank Korea CEO Ha Yungku about Financial Services Commission (FSC) Chairman Kim Seokdong’s job performance and Ha would most likely refrain from saying much.
Ha’s reluctance to comment on Kim stems not from their regulatedregulator relationship.
It appears to be odd because Ha, the one to be regulated, is eager to protect Kim, the regulator. Kim is under pressure from one party or another for handling the hottest issues involving financial markets.
Of course, the two graduated from the same prestigious Seoul National University and are close to each other with the two set against each other on more than one occasion, once notably in the 2004 credit card crisis — Kim leading the rescue of LG Card, now Shinhan Card and in the process pressuring Ha, then Koram Bank CEO, which was later absorbed by Citigroup, to join the rescue effort.
“I don’t try and talk to him much because he works for the government,” Ha said when asked about Kim. The tenor of his comment was on the borderline of friend-to-friend affection and respect.
Then, I dismissed Ha’s attitude as something like the chumminess among the graduates of the exclusive school or based on Ha’s fear of rubbing up against a senior government official. I had a great deal of doubt against Kim as a regulator because he is known to champion regulation and is believed to be one of the dwindling breed of holdouts from the government-first development- era bureaucrats. His image was that of a hard-nosed government official oppressing private enterprise and meddling in the free market. .
I changed my mind after a lengthy interview at his office last week, thinking Ha may know what I didn’t know about Kim, perhaps his core competency.
It was his rather pleasant tone of voice and smiling face that caught me off guard.
I told him that he was not how I had expected him to be.
The 58-year-old career bureaucrat, who calls himself a man of finance working in the field for 30 years and a strong believer in Korean DNA to be an international finance leader, said that he was surprised too for being seen as a hardline and control-freak zealot.
He explained that he has a hidden heart of compassion, citing an abbreviation popular among Internet- generation young people. When told of a photo in newspapers or television footage of him, he agreed that they are taken from a certain angle with his thin-rimmed glasses made prominent and often without a smile, strengthening his stereotypical image as a no-nonsensical regulator.
Although he didn’t like that image to a degree, he apparently accepted it as part of his job, explaining that he has found himself often at the vanguard of cleanup efforts, for instance, the credit card crisis.
After all, he was involved in 90 trillion won out of the 160 trillion won used in the banking sector restructuring triggered by the 1997 currency crisis. He was like Ivan the Terrible to some bankers. Some of that reputation lingers.
A real jolt in my interview with Kim came, however, when he said that he strongly believed in Milton Friedman’s efficient market.
Basically, he said that players own the market with their uncoordinated actions collectively determining the price. “Competition oils the wheels of the market and acts as a catalyst in maximizing the positive power of it,” Kim said.
When he came back after three years on mothballs, he was surprised by an attempt to directly interfere in the market by forcing the card firms to reduce fees. “I told them to stop,” he said. In the end, the card firms agreed to lower the charges through the coordination of their association. “Fees, other charges and interest rates should not be decided by the government,” he said.
He also remembered strong calls for public funds to be used to deal with the 2004 card crisis but refused to yield, instead settling it with 5 trillion won from banks. “The banks didn’t suffer from losses,” he said.
This doesn’t mean he is a laissezfaire, hands-off bureaucrat but he believes that any intervention should be made only when necessary and should be short and decisive. But here lies a contradiction that fundamentally makes it impossible for his job as government official and his market-oriented philosophy to stand side by side.
“Once the government intervenes, it is not the price but the government that rules the market,” he said.
“The government’s role in that situation is not much different from that of the Orwellian Big Brother.” Although he said that the whole purpose of intervention is to straighten out distortions that can’t be resolved when left to the discretion of the market and should be made on an exceptional basis, I gather that his statement about the purpose of the regulator could send chills down the spine among the players in the market.