STATE OF NEW YORK
FOR IMMEDIATE RELEASE:
Contact: Errol Cockfield
Insurance Department: David Neustadt
GOVERNOR SPITZER LEADS FIRST MEETING OF
COMMISSION TO MODERNIZE REGULATION OF
Commission Discusses Regulatory Reform to Help Maintain New Yorks Status as World Financial Capital and Ensure the Highest Standards of Consumer Protection for New Yorkers
Governor Eliot Spitzer today hosted the first formal meeting of the Commission to Modernize the Regulation of Financial Services, which includes heads of major financial services organizations, consumer advocates, the business community, legislators and regulators. The commission discussed an innovative proposal to institute principles-guided regulation in New York along with other potential reforms.
New Yorks financial services market has been burdened by current regulations a litany of detailed rules that are ineffective at achieving consumer protection. The United Kingdom and other international markets are moving to principle-based regulation, which focuses on broad guidelines. Some companies and consumers are concerned this may mean diminished compliance with specific rules, but the new principles-guided approach preserves relevant rules, while asking regulators and companies to focus on achieving desired outcomes. The result will be healthy markets and strong consumer protection without unneeded burdens.
The financial services industry is a bedrock of New Yorks economy. The commission will make recommendations for new laws and regulations that promote competition and business growth, while effectively protecting consumers and honest businesses from unfair or unethical practices. By reforming burdensome and ineffective regulation, the commission's recommendations will help New York retain and enhance its status as the world's financial capital.
"Modernizing regulation of financial services is first and foremost about keeping New York the financial capital of the world, said Governor Spitzer. The fact of the matter is that New Yorks current regulations are out of date. We must have regulations that promote our essential goals: a healthy, creative competitive market for financial services, access for consumers and businesses to the services they need, and strong, effective consumer protection. Furthermore, my experience has demonstrated to me that proper regulations will have a positive impact on the financial market. We have brought together many of the best minds in the State to accomplish this task.
After the meeting, Governor Spitzer was joined by Herbert M. Allison, Chairman, President and Chief Executive Officer, TIAA-CREF, Laurence D. Fink, Chairman and Chief Executive Officer, BlackRock, John J. Mack, Chairman and Chief Executive Officer, Morgan Stanley and Martin J. Sullivan, President and Chief Executive Officer, AIG at a press conference to discuss the work of the commission and how principles-guided regulation will lead to a focus on outcomes rather than process.
The commission will consider:
Senator Hugh T. Farley, Chair of the Banking Committee said: New York remains the center of the global financial universe. In order to maintain our leadership, we must balance the need to encourage innovation and competition with our responsibility to ensure safety, soundness, and consumer protections. This commission provides the opportunity for our finest thinkers to help guide financial regulation in the new millennium.
Senator James L. Seward, Chair of Insurance Committee said: The financial services industry is a key component of the economy of New York State and the nation. I believe that it is important that we continue to review ways to ensure the most effective and efficient regulation of the financial services industry in New York State. I am hopeful that the deliberations of the commission will help to ensure that New York State continues to be a leader in the regulation of insurance and financial services.
Assemblyman Joseph D. Morelle, Chair of the Insurance Committee said: Principles-based regulatory reform will establish the foundation for a more market-responsive and prosperous financial sector while at the same time providing the ethical guidelines and consumer protection the public requires. Our current rules-based approach places us at a disadvantage in terms of more progressive overseas markets. In order to maintain New York's primacy in the financial world, a prudent change of approach is needed now.
Assemblyman Darryl Towns, Chair of the Committee on Banks said: I look forward to serving on the commission and working together with the financial services community to improve the regulatory framework governing this vital industry so that New York can retain its status as the world financial capital, and ultimately, so that we can provide our consumers with quality, innovative financial services.
Insurance Superintendent Eric Dinallo, the Chair of the Commission to Modernize the Regulation of Financial Services, said: The benefit of state regulation is that states can be the laboratory for developing best practices. We want to offer New York as a national model of how to regulate financial services.
Richard. H. Neiman, Superintendent of Banks for New York State, said: We see this as the perfect time to reevaluate our regulatory models, to ensure they are calibrated to respond to the emerging challenges of an increasingly global marketplace. The Banking Department is well underway with a top-to-bottom review of the banking law, to identify further opportunities to reform.
Commission Executive Director Scott Rothstein said: We are proposing that the commission consider recommending a unique approach to regulation in New York--a principles-guided regime. This is a way to focus on outcomes within the existing regulatory framework. The principles serve to help the interpretation of rules and guide creation of new rules. We can thus move to greater focus on outcomes, without sacrificing certainty for the industry or consumer protection.
Martin J. Sullivan, President and CEO of American International Group, Inc., said: We are grateful for the opportunity to participate in this important and promising initiative. We look forward to helping ensure that the commission achieves its goal of streamlining the regulation of New Yorks financial services sector in a way that enhances the industrys ability to compete globally and better serve its customers.
Herbert Allison, Chief Executive Officer of TIAA-CREF said: I commend Governor Spitzer for creating this commission to comprehensively review New York States approach to regulating its financial industry, and look forward to constructive discussions among commission members in the months to come, said. If conceived and implemented properly, steps to modernize regulations could better protect the publics interest and enhance New Yorks position in the increasingly competitive global market for financial services.
Hector Sants, the Chief Executive Officer of the Financial Services Authority of the United Kingdom, spoke to the commission about how his agency, the sole regulator for all financial services in the U.K., is transitioning from rules-based to principles-based regulation.
Since the commission was announced, its staff has been meeting with members one-on-one to discuss their views on the key issues. This extensive review ensured that the first formal meeting was a more productive gathering.
The work of the commission will now be conducted through working groups by industry: insurance, banking and securities, and by topics such as principles-guided regulation, a single state regulator, registration and licensing, and how to manage the difference between regulation required for transactions with individual investors as opposed to among large institutions.
The meeting was held at New York Universitys Helen and Martin Kimmel Center for University Life in the Rosenthal Pavilion.