By Oh Young-jin
Financial Supervisory Service (FSS) Governor Kwon Hyouk-se has proved to be a passionate speaker.
During a recent interview at his office in Yeouido, the 55-year-old bureaucrat spoke past the designated time and went through a wide range of complex issues he is responsible for.
Kwon’s aides say that the FSS chief talks to news media without much preparation. After all, he has been working as a regulator in one form or another throughout much of his adult life.
More surprising than his passionate speech was the candor with which he spoke.
One such occasion arose during the one-and-half-hour interview when he briefly mentioned the “coming of (an economic) ice age.”
Obviously, he didn’t speak of it like an ill-fated Cassandra who nobody would listen to but from the perspective of a regulator. In other words, he appeared to say it not because he sees it coming but out of a deep sense of duty to have the nation prepared for a worst-case scenario.
“An ice age is coming,” he said after observing goings-on from Europe to the United States. “It may last two, three or even five years. I can’t say it in public because it will panic the nation.”
He observed that the level of difficulty will be severe starting next year.
This prophecy could be dismissed, if it was not Kwon who made it.
Kwon is known to be a bureaucrat who is practical and has been around long enough to know the nooks and crannies about global as well as domestic finances.
His view appears to be just like anybody else’s.
The United States has been reeling from its subprime mortgage crisis and the Iraq War for three years now after the fall of Lehman Brothers, one of the leading U.S. investment banks, an incident that is now known to be the start of the Great Recession.
Europe is also foundering after unqualified nations have lived beyond their means, triggering the ongoing debt crisis. Now Italy, the third largest eurozone economy, is in deep trouble with Germany, the locomotive of the European economy, not out of the danger zone.
The global order is in transition with the United States and Europe being overtaken by China and Asia as a whole.
In this time of great turmoil, Korea has so far fared well. Its exports are robust with current account surpluses healthy. But now, everybody agrees that tough times are ahead next year with some hoping rather than predicting a recovery will start in the second half of next year.
It seems that not just scholars but also ordinary people consider that as wishful thinking but are reluctant to speak out for fear it will become a self-fulfilling prophecy.
Considering the circumstances in which Kwon spoke of an ice age, as he indicated, he was under a great deal of pressure not to say anything. After all, the economy is as subject to the psychology of the market players as any other factor so such a remark could cause unintended consequences of an unexpected scale.
Yet it would be fair to interpret his words not as a straight prediction but one that comes from a lifetime bureaucrat who is trained to work with many times more caution than ordinary people.
Still, when he talked about a possible ice age, it was delivered in a matter-of-fact manner, giving the listeners chills.
He didn’t mince words when he shifted to banks, one of the key areas under his watch.
Above all, he stressed the importance of their social responsibility.
He talked about his dissatisfaction with foreign banks.
“What does Citibank Korea do for its Korean customers?” he said, when Citigroup’s exemplary effort to contribute to the society they do business in was pointed out.
Citibank Korea, SC First, the Korean unit of Britain-based Standard Chartered and Korea Exchange Bank (KEB), which is owned by the Texas-based private equity fund, Lone Star, have come under criticism lately for being too profit-oriented without paying attention to what they can do in return for society.
He was equally blunt about domestic banks.
“All banks imitate each other in social contribution work,” he said. “I hope that they will try and find areas where each of them can help out on a long-term basis.” He cited Samsung Life Insurance’s outreach program in China that impressed him.
At this point, he passed the one-hour mark in this numerically disadvantageous duel with three reporters, who took turns in asking questions from different angles but showed little sign of fatigue.
Kwon’s unfailing endurance may be a key factor that has kept him going after eight tumultuous months in office. He has taken care of the savings banks scandal, among others, in collaboration with Kim Seok-dong, chairman of the Financial Services Commission (FSC). Talking to both of them would make one realize that, contrary to some reports, it is their chemistry that has brought a sense of stability to a series of challenges rocking the financial arena.