Lee Bok-hyun's Duet... More Cautious Moves, Still the 'Prosecutor' Leadership [Gwanga in]

"The Director Released a Press Statement"... Anonymous Board Buzzes
External Communication Becomes More Cautious
Grumbles Inside and Outside Over 'Aljaldakkalsen' Work Style

[Image source=Yonhap News]

Recently, a 'tone-down' has been detected in the external activities of Lee Bok-hyun, the Governor of the Financial Supervisory Service (FSS). Known for his blunt speech and tough stance, Governor Lee has recently been showing a more cautious demeanor. Right after a meeting with bank presidents before Chuseok, he directly apologized for confusing remarks regarding household debt management, and he has been adopting an unprecedentedly prudent attitude, such as appearing at back-briefing sessions with a notepad in hand. Even three days after his apology, when meeting reporters at the Korea Economic Association, he refrained from commenting on questions about former Woori Financial Group Chairman Sohn Tae-seung's improper loans, saying, "This is not something to discuss here."

Externally, he appears to be restraining his remarks and paying attention to message management, but inside the FSS, evaluations suggest that the head's work style remains tough. On the online anonymous community 'Blind,' an FSS employee posted on the staff-only board titled "What happened on the 11th floor yesterday?" stating, "A press release was thrown down. A certain executive was severely reprimanded. Left the office in the afternoon. These are the rumors going around."

The 11th floor of the FSS is where the Governor's office is located. It is known that on the 11th, when the Bank of Korea lowered the base interest rate, the relevant department held a financial situation review meeting and prepared a press reference document, which Governor Lee rejected.

Regarding this, another FSS employee posted an article titled "What is financial supervision?" calling it "a press release throwing incident that stirred up the entire department." He criticized, "Instead of getting angry, logically explain what you want. If you want to highlight the pivot (interest rate cut) achieved after all the pressure from the government and ruling party to lower rates, just say so."

The interpretation is that although the Bank of Korea lowered the base rate, the FSS demanded a tone that implied they are managing household debt to prevent further increases. The author added, "It is natural that employees are not as sensitive to the rate cut as the Governor," and explained, "Because a 25bp (1bp=0.01 percentage point) cut does not threaten sound credit order or fair financial transaction practices."

There are also comments that the FSS's stance on household debt management remains unclear in the referenced document. The document states, "Please closely monitor the trend of loan-deposit interest rates so that the effect of the base rate cut can be reflected even on existing household loans." This message, which suggests easing loan rates for existing borrowers with variable rates while restraining new loans, is causing confusion in the financial sector once again.

A financial industry insider said, "I understand the intention to protect vulnerable borrowers, but I am not sure if ordering lower rates on existing household loans while worrying about an increase in new loans (household debt) is fair to borrowers." Another financial sector official described it as "the 'Aljaldakkkalsen' ('knowing well, neatly, and sensibly'?a newly coined term) approach that Governor Lee has been taking."

There were also criticisms that Governor Lee's actions sometimes have political undertones. The Blind post author criticized Lee's push for amendments to the Commercial Act, saying it was because if the KOSPI rises, the administration's approval rating also rises, and questioned, "What on earth does the rise of the KOSPI have to do with sound credit order and fair financial transaction practices?" Another mid-level FSS employee, who requested anonymity, said, "Inside, Governor Lee's leadership is called 'rule by fear.' Even junior employees initially liked having a strong governor, but morale has dropped significantly as they work without overtime pay."

Inside and outside the FSS, despite his term having long exceeded two years, Governor Lee is still seen as exhibiting a 'prosecutor-style' work approach. A financial company official under FSS supervision said, "There have been too many cases where FSS disciplinary actions are reported in the media before the financial companies are notified," adding, "Creating public opinion first and then pushing forward is a typical prosecutor's way of handling cases."

Regarding the FSS's recent initiation of accounting reviews on Korea Zinc and Young Poong, an FSS official said, "You should start only after recognizing accounting violations, but now seems too premature," and explained, "Some see it as abrupt." It is perceived as if the accounting review is being conducted first, similar to how prosecutors start with a raid based on the perception that something wrong has been done.