Mountain of tasks await FSC chair-nominee Choi

By Park Hyong-ki

Choi Jong-ku

Financial Services Commission (FSC) chairman nominee Choi Jong-ku faces tough tasks ahead as Korea’s top financial regulator.

Choi said his top priority is preventing the debt bubble in the household sector from bursting. He made the comment after the presidential office announced his nomination.

Apartment prices have been rising at an alarming pace in certain areas following mortgage deregulation over the years, fueling household debt.

Choi needs to fix problems former governments and his predecessors caused through deregulation that sought to promote debt-led growth. He will have to try to bring stability to the middle and working classes ― the two income groups the regulator had relatively ignored.

The lifetime finance bureaucrat has earned credit for stabilizing the foreign exchange market by cooling the depreciation of the Korean won against the U.S. dollar in the wake of the 2008 global financial crisis.

Reports say he made currency swap deals with the United States and China, and devised emergency liquidity measures to cushion the economy from the global financial fallout on subprime mortgages.

The times now call for Choi to flex his financial and regulatory muscles again, this time domestically for the well-being of the low-income group, not for the rich or conglomerates, because they can take care of themselves.

As the future FSC chief, he will have to use his political skills to persuade and draw a consensus from the public, lawmakers and other economic agencies, such as the finance and land ministries, and the Bank of Korea.

The market has seen how disorganized those agencies were as they disagreed and faced conflict about how to deal with household debt, interest rates, policy banks, corporate restructuring and property taxes.

It was a mess that only led to harsh words between fiscal and monetary authorities, with the regulator and the land ministry jumping into a tug of war. In the end, people, or the taxpayers, suffered the most.

“The household debt problem cannot be fixed in the short term,” Choi told reporters after his nomination.

“Not only will the FSC have to solve this problem, but it will need help from other economic and noneconomic agencies.”

Besides household debt, which rose 11.1 percent to 1,359.7 trillion won at the end of March, or 93 percent of the nation’s GDP, Choi faces issues concerning internet banks, corporate debt restructuring and investment banking.