Bureaucrat Appointed as FSC Chairman vs. Powerful Insider as FSS Governor, Round 2: "Cooperation More Urgent Than Conflict" [Why&Next]

Lee Okwon, a seasoned bureaucrat, appointed as FSC Chairman; Lee Chanjin, a close aide to the President, named FSS Governor
Past conflicts between the two agencies highlight the need for cooperation amid numerous pressing issues

Lee Okwon, nominee for Financial Services Commission chairman, expresses his appointment thoughts on the 14th as he arrives at the confirmation hearing preparation office set up at the Korea Deposit Insurance Corporation in Jongno-gu, Seoul. Photo by Kang Jinhyung

The Lee Jaemyung administration has appointed new heads to oversee financial policy and supervision just two months after taking office. Lee Okwon, a seasoned bureaucrat and former First Vice Minister of Economy and Finance, has been named chairman of the Financial Services Commission, while Lee Chanjin, an attorney at Jeil Joint Law Office and a judicial training classmate of President Lee Jaemyung, has been appointed as the new Governor of the Financial Supervisory Service. As with the previous administration, a career bureaucrat has been appointed to head policy, and a close political ally has been named to lead supervision, raising the possibility of renewed tensions between the two agencies. With these appointments preceding any organizational restructuring, it is now expected that previously discussed reforms, such as dismantling the FSC or separating the FSS, will be put on hold.

Lee Okwon, a seasoned bureaucrat, named FSC chairman; Lee Chanjin, a close presidential aide, appointed as FSS governor

On August 14, nominee Lee Okwon met with reporters at the Korea Deposit Insurance Corporation in Jung-gu, Seoul, where the confirmation hearing preparation office was set up. He stated, "I feel a tremendous sense of responsibility as I take on this important role at a very difficult time for our economy," adding, "I will strive to promote productive financial development by supporting vulnerable groups such as ordinary citizens and small business owners, and by seeking to vitalize a sound capital market."

Lee is regarded as a traditional bureaucrat with outstanding expertise in macroeconomics and economic policy. After passing the 35th civil service exam in 1991, he began his public service career and held key positions in the Ministry of Finance and Economy (now the Ministry of Economy and Finance), including Director-General for Economic Policy and Director-General for Economic Structural Reform. He is particularly known as an economic policy expert, having gained extensive hands-on experience during his long tenure in the economic policy division.

There is a welcoming atmosphere within the FSC regarding Lee's nomination. He is highly regarded within the government for his broad insight into not only financial policy but also the overall economy, as well as for his rational character and meticulous work style. Many see him as the right person to lead key policies championed by President Lee, such as stabilizing livelihoods and revitalizing the capital market. Kang Hunsik, Chief Presidential Secretary, commented that Lee "will faithfully implement the Lee Jaemyung administration's financial philosophy, including financial policies that address the needs of ordinary citizens and the promotion of a sound capital market, based on his extensive experience as an economic bureaucrat."

The appointment of attorney Lee Chanjin as the new FSS governor is being described as a "surprise pick," as his name had not previously appeared in speculation about potential candidates. With almost no experience in the financial sector, he had not been considered part of the candidate pool. Lee, a graduate of Seoul National University School of Law, is an 18th classmate of President Lee Jaemyung from the Judicial Research and Training Institute, and they were both members of the Labor Law Society. He has maintained a close relationship with President Lee, having served as his legal counsel in various cases, including the North Korea remittance allegations and violations of the Public Official Election Act. Lee has also built his career as Vice President of Lawyers for a Democratic Society (Minbyun), Executive Director of the People's Solidarity for Participatory Democracy, and a member of the National Pension Fund Management Committee.

His lack of experience in the financial sector is considered a weakness. In response, the FSC explained, "Lee has demonstrated outstanding job performance by providing legal advice and handling litigation on capital market accounting issues for numerous companies, including venture startups and listed firms." The FSC emphasized, "With his diverse experience and expertise, he is the right person to tackle the FSS's immediate tasks, such as restoring trust in financial companies and strengthening consumer protection."

Speaking with Asia Economy, Lee Chanjin said, "I will fulfill the core supervisory duties of the FSS while reflecting the government's key policy objectives." He added, "I will faithfully follow the government's direction, and since some of the policy pledges are already reflected in the national agenda, I intend to focus on those areas." He also emphasized his willingness to listen, stating, "I will listen carefully."

Lee Chanjin, the new Governor of the Financial Supervisory Service. Photo by Yonhap News

Tensions between the two agencies have occurred in the past; with many pressing issues, close cooperation is essential

The appointment of a close presidential aide as FSS governor has raised concerns that conflicts with the higher-level FSC may resurface. In the case of former FSS Governor Lee Bokhyun, who was considered a powerful figure, he took the lead in both financial policy and supervision, resulting in clashes with the FSC and causing confusion in financial policy.

However, some believe that such conflicts are unlikely to recur under the new governor, as Lee Chanjin is not known for a confrontational personality, unlike his predecessor. With the ongoing economic downturn, stabilizing livelihoods has become extremely important, and there are numerous pressing issues, such as household debt, preventing financial fraud, and revitalizing the capital market. As a result, it is expected that both agencies will make every effort to avoid conflict and instead cooperate closely.

In this regard, nominee Lee Okwon stated, "The FSC and FSS must work very closely together and maintain a 'one team' spirit to develop the financial market and industry, as well as to achieve the government's key policy objectives." He added, "I spoke with Governor Lee yesterday, and we agreed on this approach."

With the appointment of new financial leaders, the selection of heads for affiliated institutions is also expected to accelerate. At the Korea Development Bank, the chairman position has been vacant since former Chairman Kang Seokhun completed his three-year term and stepped down last month. Similarly, the Export-Import Bank of Korea has been without a head since former President Yoon Heesung retired last month. Choi Wonmok's term as chairman of the Korea Credit Guarantee Fund ends at the end of this month, and Yoo Jaehoon's term as president of the Korea Deposit Insurance Corporation runs until November.

Personnel changes within the FSC and FSS are also expected to speed up. The FSC's Deputy Chairman Kwon Daeyoung was recently promoted, leaving the Secretary-General position vacant. Due to the political turmoil following the impeachment crisis, high-level appointments have been delayed, resulting in a backlog of senior positions. The FSS is also likely to see rapid changes among its executives.

However, organizational restructuring of the financial authorities is expected to be postponed. The National Policy Planning Committee was anticipated to announce a restructuring plan when it unveiled its national agenda the previous day, but the announcement was delayed due to various disagreements and the appointment of new agency heads. Initially, the committee reportedly proposed transferring the FSC's domestic financial policy functions to the Ministry of Economy and Finance and merging supervisory functions with the FSS to establish a new Financial Supervisory Commission, which was reported to the Presidential Office.

This would have effectively meant the dismantling of the FSC, but with a shift in sentiment at the Presidential Office, there is now speculation that the FSC will remain intact. This view has gained traction as President Lee has recently praised the policy execution capabilities of FSC officials on several occasions. However, Chief Secretary Kang stated, "All options for government reorganization remain open," adding, "Government reorganization has not been finalized, and since the FSC is currently active, the nomination was a natural step."