New York’s – and consequently Wall Street’s – top financial regulator Benjamin Lawsky will be stepping down from his position as banking regulator in the state Department of Financial services.
The 45-year-old former federal prosecutor has been both much praised and somewhat hated for his incredibly dogged and aggressive pursuit of financial wrongdoing. Lawsky was appointed by NY Governor Andrew Cuomo to head up the newly formed Department of Financial Services, a post from which he has created a broad purview for the new agency, which regulates state-licensed financial institutions and insurers.
In an email to staff Wednesday, Lawsky said he was “dreading having to write” his goodbye letter but that “after four years doing a job I truly love, it is time for me to move on.”
Lawsky developed a reputation for being aggressive and colorful – two things that did not exactly endear him to New York’s largest banking firms – though two things that it seems are now expected of his follow-up act.
“Lawsky made this a high-profile job,” Guggenheim Securities analyst Jaret Seiberg said in a note to clients Wednesday, reports The Wall Street Journal. “Those who take the position will be looking to follow in his footsteps and get the same publicity that Lawsky got. That means bringing high-profile enforcement actions.”
Lawsky first came to national attention in 2012 when he – before the Justice Department managed to act – secured a $340 million settlement with U.K. bank Standard Chartered PLC over $250 billion worth of restricted transactions the bank handled for Iranian customers. Later in 2012, Standard Chartered reached a $327 million settlement with the Justice Department, Treasury Department, Manhattan district attorney and Federal Reserve Bank of New York.
He became infamous due to his agency’s ability to revoke New York banking licenses— without which many of the city’s biggest international players would simply be shut out of the game.
French bank BNP Paribas SA learned that the hard way when he threatened to pull their license during negotiations last year, according to people familiar with the matter who spoke to The Journal. Lawsky backed down from that, but not before the bank had agreed to an unprecedented combined $8.9 billion settlement with U.S. authorities last June for violations of U.S. economic sanctions against Sudan, Iran and other countries.
Lawsky has announced that his next act will involve setting up his own law firm consultancy. This makes him a bit unusual in that many top financial regulators go from their government jobs to positions at law firms that service the banks they once regulated.
“We have seen a half-dozen [Securities and Exchange Commission] enforcement chiefs depart for $3 million-and-up positions at major law firms,” said John C. Coffee Jr., a professor at Columbia Law School — Lawsky’s alma mater. “Now, in contrast, we see someone who is probably the toughest cop on Wall Street…who when he decides to leave, he’s not gotten a warm welcome from that market.”
If PYMNTS is reading that quote correctly – apparently these firms hold a grudge about regulators – well, regulating them.
Lawsky will likely find ways to keep busy even if the big firms do not come knocking – apart from setting up his own firm, he will also serve as a visiting scholar at Stanford University, working on the school’s cybersecurity initiative.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More