In our “5 Minutes With …“ feature we spend 5* interesting minutes with leading government officials and policy leaders. In this “5 Minutes With …” segment we speak with Benjamin Lawsky, New York State Superintendent of Financial Services.
Superintendent Lawsky heads the New York State Department of Financial Services, a new state agency which combines the former New York State Insurance Department and the former New York State Banking Department. Early in his first year in office, Governor Andrew Cuomo proposed combining the then-separate Insurance and Banking Departments. Authorizing legislation passed in 2011 and the new Department of Financial Services began operation on October 3, 2011, with Benjamin Lawsky appointed by Governor Cuomo as New York’s first Superintendent of Financial Services.
As with any merger of large enterprises, whether commercial or governmental, the combination of the two Departments came with many challenges. Simply combining two organizations which had each existed for more than 150 years undoubtedly brought many managerial challenges. Even larger, however, was the backdrop to the merger: the greatest financial crisis in generations had just occurred and the process of recovery had barely begun. How to better regulate financial services and avoid future crises quickly became, and remains, a highly-charged discussion nationally and at the state level. (Banking is primarily, but not exclusively, regulated by the federal government, while insurance remains primarily regulated by the states. New York State is a significant banking regulator, but the leading banking regulators are federal agencies. New York State is, however, the leading regulator of the insurance industry.)
Creation of the Department of Financial Services is not a cure-all or magic bullet, and its existence does not assure better or more effective financial regulation, nor that we will avoid a future financial crisis. It is, however, a substantial change in New York State’s financial regulatory structure and, if well-designed and well-implemented, offers the opportunity for meaningful advances in financial regulation. New York State has a vital national role in financial regulation, with many of the world’s leading banks and insurance companies located here and the Department’s regulated entities having assets totaling over $6 trillion. Governor Cuomo’s combination of New York State’s two financial regulators, as now being implemented by Superintendent Lawsky, may affect the financial services industry for decades to come.
In our conversation, Superintendent Lawsky discusses the thinking behind the creation of the Department, how the merger has progressed, the current condition of the banking and insurance industries and what the future holds.
* For this segment, we’ve employed a flexible definition of “5”. Our conversation with Superintendent Lawsky runs well past 5 minutes, but his discussion of how the Department was created, it’s progress to date and the challenges ahead is well worth watching in it’s entirety.