[SoftM] "Endure the Curse of Watchdog"... Financial Supervisory Service Hosting 'Oldboy'

[Asia Economy Reporter Haeyoung Kwon] "External criticism of supervisory authorities is inevitable. It can be called the watchdog's curse."

Yoon Seokheon, Governor of the Financial Supervisory Service (FSS), along with executives and heads of departments, gathered in one place on the 18th. This was because Im Joojae, former Deputy Director and president of the Old Boys (OB) association, gave a lecture to his juniors. The topic of this year's first lecture was 'The FSS as seen from the outside.' The timing and topic are not ordinary. Recently, the FSS has been under heavy fire due to supervisory failures and abuse of authority highlighted by the derivative-linked fund (DLF) and Lime Asset Management incidents. This meeting was arranged to hear the insights of a senior member at a time when criticism of the organization is increasing.

Former Deputy Director Im is likely aware of the sense of self-disgust(?) that his juniors currently feel. However, he chose to offer 'harsh words' rather than consolation and encouragement. He emphasized that although FSS employees may think of themselves as mere accessories, from the outside, the FSS's authority is immense. Therefore, he urged that this authority must be exercised with caution. He also mentioned that criticism of the FSS is inevitable. Since the heavy disciplinary actions against DLF, the FSS has been suffering from backlash and criticism from financial companies, and many executives nodded in agreement at the phrase 'watchdog's curse.'

The atmosphere at the FSS is more unsettled than ever. Woori Bank has announced its intention to exercise legal defense rights in opposition to the DLF sanctions. There is no way to neutralize the effect of the sanctions, and public criticism is fierce, causing morale within the organization to drop significantly. Whether the sanctions were appropriate is expected to remain a subject of controversy. The possibility that the sanctions' effectiveness will not be enforced is also high. However, what is important is that the FSS acted under its authority and judgment. Now, the ball is out of the FSS's hands. Whether it is investors or financial companies, criticism is unavoidable regardless of the choice. The FSS must quietly continue to do its job.

Professions that wield a sword are inevitably subject to checks and criticism. This is even more true if that sword shakes the governance structure of financial holding companies. Checks and criticism are necessary to prevent the FSS, a financial power institution, from becoming complacent. The FSS is known as a 'thankless job.' If sanctions are strong, it is accused of 'overstepping authority'; if weak, it is accused of 'leniency.' It is also true that the FSS is asked to conduct market-friendly supervision in normal times but is criticized for supervisory absence when accidents occur. This is an unavoidable fate. Nevertheless, the FSS is the 'last bastion' that prevents systemic risk in the domestic financial market and restores financial order. We hope that the FSS employees, afflicted by the watchdog's curse, will renew their determination and move forward.