When the Financial Services Commission suspended four mutual savings banks on Sunday, it said there would be no more industry-wide restructuring. Instead, it promised to deal with each savings bank as soon as it shows signs of insolvency.

No one was mistaken if this pledge sounded familiar. When it suspended the operations of seven savings banks for six months last September, the commission said public concerns about another round of restructuring were unjustified because there would be no such drastic action. It was not the first time it made such a promise.

This is not to say that the commission had any intention of deceiving savings bank depositors and other clientele when it made a promise it could not keep. Instead, it would be safe to say that it aimed at soothing jittery depositors and bondholders and, by doing so, forestalling bank runs and disruptions in the financial market.

Nonetheless, depositors with amounts in excess of the insurance-guaranteed 50 million won and holders of subordinated bonds had to hold the bag when the commission failed to make good on its promise. In other words, they were denied an opportunity to cash the uninsured portions of their deposits and their holdings of subordinated bonds before the four savings banks were pronounced insolvent.

According to one estimate, the total sum not insured by the Korea Deposit Insurance Corp. stands at 78.9 billion won, while the amount of subordinated bonds is around 500 billion won.

Of course, the depositors and the bondholders have their share of accountability. They had a false sense of security when they decided not to cash their deposits or their high-risk bonds when they had the chance in September.

At the time, the commission, which had looked into the books of 85 savings banks, suspended operations of seven of them and put another four on probation. The four, which were believed to have a fair chance of survival though they remained below the proper level of capital adequacy, were ordered to replenish their capital if they were to remain in operation.

To the chagrin of their depositors and bondholders, however, they failed to raise their BIS capital adequacy ratios to 5 percent or higher, as ordered by the commission. This almost sealed their fate. True, the commission cried wolf. But ultimately, the depositors and bondholders have no one but themselves to blame.

The ill-fated savings banks are given six months to raise capital by issuing new shares or selling off their assets. Otherwise, they will be sold off or taken over by the state-run Korea Asset Management Corp.

The suspension of operations of the four savings banks followed the exit of 16 others from the market last year. Deregulation was much to blame.

Deregulation began with President Kim Dae-jung’s administration, which allowed mutual savings and finance companies to change their names to savings banks and raised deposit insurance coverage from 20 million won to 50 million won in 2002. Its successors also went ahead with deregulation under the pretext of permitting low-income people and small businesses greater access to loans.

As loosened supervision followed deregulation, savings banks engaged in all kinds of irregularities. Regulators turned a blind eye when they made illegal loans or when they were used as if they were controlling shareholders’ private coffers. Worse still, some of them took huge bribes from savings banks. Simply put, the industry was a hotbed of corruption.

A telling case in this regard involves Kim Chan-kyong, chief executive of Mirae Savings Bank, one of the four whose operations were suspended. He attempted in vain to stow away after withdrawing 20.3 billion won from its money market deposit account at Woori Bank. Coast Guard officers arrested him before he boarded a fishing boat on the west coast on Friday.

No wonder, prosecutors raided the four savings banks for search and seizure on Monday. They should bring to justice those who lined their pockets and engaged in bribery. No less important, however, is to tighten regulations on making loans and investments and strengthen the commission’s supervision.