Financial oversight might need reform

With an alleged cover-up of the so-called Chung Hyun-Joon scandal by the Financial Supervisory Service(FSS), there are calls for full restructuring of the financial supervisory system.

The current supervisory system was created at the end of 1997, when there was a war over independence of the Bank of Korea between the Finance-Economy Ministry(FEM) and the Bank of Korea, the nation¡¯s central bank.

The Financial Supervisory Service(FSS) has become a powerful authority with no intervention even by the Financial Supervisory Commission. In particular, as the Financial Supervisory Service(FSS) is run by the fees paid by financial institutions, it is beyond the control of other government offices.

However, its apparent corruption was revealed and rumors have spread about its honeymoon with financial institutions.

Experts point out that it is necessary to strengthen the authority of the Deposit Insurance Corp. They noted that Deposit Insurance Corp (DIC) is the only institution that could check the operation of Financial Supervisory Service(FSS). The Deposit Insurance Corp (DIC) is in a position to pay bank customers` deposits when a financial institution goes bankrupt, so it could supervise financial institutions to prevent their insolvency.

They noted that the Federal Deposit Insurance Corp. of the United States, together with the Federal Bureau of Investigation, investigated in the early 1980s the responsibility of large shareholders and the management for those financial institutions that Federal Deposit Insurance Corp (FDIC) provided public fund because of insolvency.

Accordingly, it is necessary for Korea to upgrade the position of the Deposit Insurance Corp (DIC) head to the level of the Financial Supervisory Service(FSS) head and let them cross check each other`s operations in order to prevent cover-ups of illegal acts.

Meanwhile, high-ranking officials of the Ministry of Finance and Economy said that it is a problem that the Financial Supervisory Service(FSS), which is not an administrative organization, has administrative power in its operation. He added that the Financial Supervisory Service (FSS) has to be restructured into an office for financial supervision and must make its employees public servants so that they could take more responsibility for their work.