Testimony of Benjamin M. Lawsky Before the New York Senate Committees on Insurance and Banking
May 18, 2011
I am both honored and humbled to be nominated by Governor Cuomo to serve the people of New York as Superintendent of Financial Services. It is an enormous responsibility; a position that will not only coordinate the merger of two major State agencies, but that also will oversee New York’s financial services industry.
If I may, let me begin with a quick summary of my background.
Following law school, I clerked for two great judges and then I went to work at the Department of Justice representing various federal agencies.
I later went to work for Senator Schumer, who had just joined the U.S. Senate, as his Chief Counsel on the Senate Judiciary Committee.
I returned to New York in late 2001 to serve as an Assistant United States Attorney in the Southern District of New York. My work there focused primarily on organized crime, terrorism, and white collar securities fraud cases.
In early 2007, I joined then-Attorney General Cuomo, as his Deputy Counselor and Special Assistant, where I spearheaded a number of the AG’s initiatives including a nationwide investigation of the student loan industry.
This year, I transitioned to the Executive Chamber, where I am now the Governor’s Chief of Staff. In that role, I have had the pleasure of getting to know some of you and your staffs, as we worked collaboratively to pass the new Financial Services Law in the budget.
As the Governor declared in his State of the State, it is time to signal to the world that New York is open for business. I believe the new Department of Financial Services will play a major role in keeping the door wide open. The banking, insurance and financial services industries are vital to New York’s economy and growing those industries means more good jobs for NYers.
The DFS will also allow us to create a more modern and efficient financial regulator that promotes industry innovation, while also protecting consumers. Our goal will be to encourage innovation while at the same time monitoring new financial products carefully in order to ensure that these products don’t create systemic risk.
Protecting the solvency of our banks and insurance companies is crucial to the lives and futures of virtually all New Yorkers, and protecting our financial markets from systemic risk is therefore essential in promoting a sound economy that benefits us all.
To accomplish this, the DFS will need to have several core areas of focus, at least at the outset.
First, the DFS must be right-sized and wisely structured. There are efficiencies we can realize in the short-term by eliminating redundancies and waste. A more efficient DFS will, we believe, make New York more attractive to business leading to more jobs. It will also ultimately result in lower rates and costs for consumers.
Second, the creation of the DFS will give us the opportunity to review and, if necessary, reform our regulation of financial services. Our regulation of these sectors must keep pace with their rapid and dynamic evolution. And it must reflect the increasing interconnectedness of the banking and insurance industries. New York needs to remain the world’s leader in financial services and a regulator that is nimble and doesn’t stifle innovation can contribute significantly to New York’s economic future.
Third, we must remain vigilant against fraud in our markets and against consumers. Whether its staged accidents, insurance fraud, predatory lending or money laundering, reducing fraud will reduce costs for both businesses and consumers.
Obviously, the priorities of the DFS will change over time as the agency and the industries evolve. Nevertheless, if I am confirmed, several underlying principles will guide my work each and every day:
First, promoting healthy banking and insurance industries and protecting consumers are not mutually exclusive. In fact, they can go hand in hand.
Second, I will go to work each day reminding myself that banking, insurance and financial services are not just about markets, and numbers, reserves, and evaluations of risks. These industries are about protecting real people who often have all too-real problems in their everyday lives. Whether its health insurance coverage, or relief from a natural disaster; whether it’s a family’s first home and mortgage or ensuring that a senior citizen’s retirement account is safe, its about New Yorkers first. Needless to say, if confirmed, I will take this job incredibly seriously and give my all to do it right.
Third, I believe in the saying that it is best to listen twice as much as you talk. The DFS bill was significantly improved because we listened to all sides in the debate and came up with reasonable solutions to some fairly sticky issues. I will bring that same attitude to the Department if confirmed.
Along those same lines, I believe a partnership with the Legislature will be vital to the success of this new agency. If confirmed, I will need your help and advice in making the DFS the leanest, most efficient and most effective Financial Services agency in the nation.