October 3, 2011
Contact; David Neustadt 212-480-5262
Superintendent Lawsky Announces Launch of New Department of Financial Services
Mission Set to Keep New York the World Financial Services Capital, Better Protect Consumers & Achieve New Efficiencies
New Jobs Initiative Will Work with Industry; New Consumer Unit Expands Fight against Fraud; New Real Estate Finance Unit to Develop & Implement Reforms
Benjamin M. Lawsky, Superintendent of Financial Services, set the mission and announced the structure for the new New York Department of Financial Services at a ceremony today. Superintendent Lawsky was joined by 19 former Banking and Insurance Superintendents, other officials and hundreds of Department staff at the ceremony at Pace University marking the official start of the Department, which merges the State Banking and Insurance Departments.
“The Department of Financial Services has three main goals—keeping New York on the cutting edge as the financial capital of the world, protecting consumers better than ever before, and serving as a model of efficient government. Today, I am announcing a Jobs Initiative to partner with the financial services industry and find the best ways to attract more jobs to New York State. We have set up the Financial Frauds and Consumer Protection Division, which has new powers to help consumers on all types of financial products and services. In addition, we will be creating a new executive level position, a Director of Enforcement, who will oversee all criminal investigations. Also, I can announce that the new Department is on track to achieve more than $25 million in budget savings in just its first year,” Superintendent Lawsky said.
The Department will have five main divisions:
- The Insurance Division will carry on the core functions of regulating all insurance activities in New York, including life, property and health insurance.
- The Banking Division will continue regulating state chartered banks, along with other financial services providers such as mortgage servicers and originators, check cashers, money transmitters and budget planners.
- The Financial Frauds and Consumer Protection Division will protect and educate consumers of financial products and services and fight financial fraud. The Division will pursue civil and criminal investigations and bring enforcement proceedings as appropriate.
- The Real Estate Finance Division will focus on all aspects of the mortgage industry to ensure that the lessons from the recent financial crisis are learned and new reforms are instituted.
- The Capital Markets Division will actively monitor the latest developments and products and help the Department better police systemic risk.
“We are taking the best of the Banking and Insurance Departments and working to add new skills and responsibilities so we can keep pace with the rapid developments in the financial markets,” Superintendent Lawsky said. “That’s necessary to keep consumers protected and keep the institutions we regulate safe, solvent and able to meet their obligations.”
“The Department’s new Jobs Initiative is in line with Governor Cuomo’s priority on job creation. We will work with businesses to bring jobs and capital to New York, both upstate and downstate. When businesses are looking to consolidate their operations or start a new operation, they should be doing it in New York,” Superintendent Lawsky said. This effort will be led by Deputy Superintendent for Financial Services James J. Wrynn.
In addition, the insurance and banking industries provide essential services to the business community, so a healthy and competitive market for their products helps all businesses to grow and create jobs.
The Financial Frauds and Consumer Protection Division brings together the fraud and consumer units of Banking and Insurance, but also adds important new powers. It can conduct investigations, research, studies and analyses of issues affecting consumers of most financial products and services.
“The Governor’s vision in merging banking and insurance was to create a stronger agency able to not only improve its regulation of those two essential industries, but also cover many things that currently fall between regulators,” Superintendent Lawsky said.
Chuck Bell, Programs director for Consumers Union, said "We are thrilled that the new Department of Financial Services is putting consumer protection at the core of its vital mission. Under the leadership of Gov. Andrew Cuomo and Superintendent Benjamin Lawsky, New York State is leading the way in demonstrating that more effective financial oversight goes hand in hand with a fairer and safer marketplace for consumers. The Department's new Financial Frauds and Consumer Protection Division has greatly strengthened investigative and enforcement powers to shut down financial scams and ripoffs, and has already achieved important victories in stopping unfair practices in mortgage servicing."
Michael P. Smith, President and CEO, New York Bankers Association, said: “NYBA supported the legislation to establish a new Department of Financial Services and commends the leadership of Governor Cuomo and the new Superintendent, Ben Lawsky. The centralization of regulation into one agency signals the state’s commitment to the most diverse banking industry in the nation, along with a commitment to strengthen New York’s position as a global financial capital.”
Gary Henning, American Insurance Association, Northeast Region Vice President, said: “AIA looks forward to working with Superintendent Lawsky and the staff of the newly created Department of Financial Services (DFS). AIA supports DFS’ mandate to streamline and strengthen New York’s insurance marketplace. Effective and efficient insurance regulation promotes a vibrant and competitive market which benefits both consumers and insurers alike.”
Sally Miller, Chief Executive Officer, Institute of International Bankers, said: “We applaud Superintendent Lawsky’s commitment to promote a healthy and vibrant financial services industry in New York and look forward to continuing to work with him and his colleagues on issues of importance to internationally headquartered banking institutions operating in New York.”