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Press Release
New York State Superintendent of Banks Calls Goldman Sachs' Bank Decision a Sign of Future Regulatory Reform
Neiman Highlights Role of New York in Future Regulatory Structure and Vitality of the Dual Banking System

October 23, 2008

New York, NY: New York Superintendent of Banks, Richard H. Neiman, in a speech today before the annual meeting of the New York Bankers Association, called the recent restructuring of investment firms as a preview of the regulatory model of the future.  He cited the decision by Goldman Sachs Group Inc. to convert to a bank holding company and operate under a state banking charter as a viable model to be considered by various financial institutions as we begin our national debate on regulatory reform. 

“Monumental events have reinvented Wall Street over the recent months and a new supervisory model for the investment banking industry is beginning to take shape,” according to Superintendent Neiman. “The current market crisis has served as a catalyst for moving this debate forward in practical terms, as business choices contribute to building a twenty-first century regulatory framework. Goldman Sachs’ decision to convert to bank holding company status and form a New York state-chartered bank has historic implications not only for their company, but for the entire financial regulatory system.”

As a result of its restructuring, Goldman Sachs will be subject to a regulatory regime with higher capital requirements, lower leverage and continual on-site examination. The new entity will be supervised by both the Federal Reserve and the New York State Banking Department. “The Banking Department has a clear history of successfully partnering with the Federal Reserve Bank of New York to reduce the duplication that might otherwise result from overlapping regulatory schemes,” remarked Mr. Neiman. “We demonstrate this daily in our shared responsibility for almost all of the U.S. branches of foreign banks.  An equally successful partnership exists with the Federal Deposit Insurance Company (FDIC) with respect to insured state non-member banks.“

Neiman also described Goldman Sachs’ decision as informed by the lessons of the current market turmoil.  “This decision is an acknowledgement that, as the country emerges from this unprecedented period of market strain, financial institutions will be seeking the supervisory and regulatory structure that provides the highest level of confidence to investors, customers and counterparties,” Neiman said. “And, states are well-positioned to contribute to this renewed financial landscape.”

Neiman believes that states like New York deserve a prominent place in a renewed regulatory framework. He expressed his confidence in the vitality of the dual banking system, as states offer progressive laws coupled with a supervisory force that understands diverse local needs -- whether for wholesale activities, community banking or consumer protection, and can respond quickly to facts on the ground. Governor Paterson’s new comprehensive mortgage legislation was cited as evidence of New York’s leadership on consumer protection issues and of the role that states law can play in shaping a national response.

While noting that the Treasury relief package is an important step in stabilizing the market, Neiman emphasized the importance of state input and oversight to the success of the plan, particularly in assisting homeowners. “While New York supports the recent actions by the Treasury Department, there remains much more to be done,” stated Superintendent Neiman. “Staving off an imminent market collapse was vital, but lasting stability needs to address the origins of the problem: the escalating numbers of American families who are losing their most valuable asset- their homes. I urge the Treasury Department to use its new authority to pursue mass modifications and other foreclosure prevention solutions.”

Neiman expressed confidence in the future of New York’s banking industry, despite the current economic downturn, and noted that local community banks and credit unions in various areas across the state are expanding their business.  Neiman encourages the underwriting of prudent loans and stated that, “the institution that makes local credit available during these tough times can expect a further plus by developing a loyal customer base for the future.”  

New York State is also seeing growth in the foreign and wholesale banks segment; this year the Banking Department approved licenses for two major Chinese banks, once again proving that New York is the capital of global finance.

The full text of the Superintendent’s speech is also available on the Banking Department’s Web site at 

TheNew York State Banking Department is the regulator for all state-chartered banking institutions, virtually all of the United States offices of international banking institutions, all of the State’s mortgage brokers, mortgage bankers, check cashers, money transmitters and budget planners. The aggregate assets of the depository institutions supervised by the Banking Department are more than $2.2 trillion.

In addition to regulating banking institutions, the Banking Department is active in informing and educating all New Yorkers on banking matters. To contact the Banking Department, please call 1-877-BANK-NYS or visit our Web site at

Department of Financial Services


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