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Acting Superintendent of Banks Elizabeth McCaul Speaks
about Banking Department’s Efforts on Behalf of Holocaust Victims

Click here for related speech

NEW YORK, March 26, 1999 – Acting Superintendent of Banks Elizabeth McCaul spoke to the Economic Club of Florida in Tallahassee today about the Banking Department’s work on behalf of Holocaust survivors and their heirs, calling this work a top priority both within the Department and the State of New York.

"I am truly proud of the work my office has done on behalf of Holocaust survivors and the support we have received from our Governor, George Pataki," said McCaul. Her address, which is attached to this news release, detailed the work of the Banking Department and its Holocaust Claims Processing Office, which was established by the Governor in September 1997.

The New York State Banking Department is the regulator for all State-chartered banking institutions, including seven of the State’s ten largest banks, and virtually all of the U.S. offices of international banking institutions. The cumulative assets of companies and institutions supervised by the Banking Department exceed $1.9 trillion.

Acting Superintendent of Banks Elizabeth McCaul’s Address
before the Economic Club of Florida in Tallahassee, Florida

Click here for related press release

March 26, 1999

Acting Superintendent of Banks Elizabeth McCaul delivered an address before the Economic Club of Florida in Tallahassee. The text of her remarks follows:

I am very pleased to have the opportunity to speak about the role of the New York State Banking Department in assisting Holocaust victims and their families recover assets held by Swiss banks. Every once in a while, as a government regulator, I have an opportunity to "fight the good fight." This has been one of those occasions, and I am truly proud of the work my office has done on behalf of Holocaust survivors and the support we have received from our Governor, George Pataki.

Some of you may be aware that in the Fall of 1996, the Banking Department involvement began with the initiation of an investigation, focusing on the activities of Swiss banks in New York State prior to and during the Second World War. The decision to commence this investigation was a result of disclosures by former Senator Alfonse D’Amato and the Senate Banking Committee of certain declassified U.S. Treasury Department documents from 1941. These documents were unique in that they revealed for the first time the nature and extent of the Swiss banking activity in New York State during the pre-war and wartime period.

What was most interesting about these documents was the fact that they also contained the names of several thousand customers of Swiss Bank Corporation and Credit Suisse from that period. Both of these institutions had offices in New York City during the war. Their customers were almost all Europeans who had their assets transferred to New York to protect them from seizure in the event of a German invasion of Switzerland.

Following these disclosures, Governor Pataki ordered a thorough investigation by the Banking Department into the fate of those, and any other assets, held by Swiss banks in New York which may have belonged to victims of the Holocaust.

Although the investigation has answered many questions, many more have been raised.

Switzerland is known as a bank secrecy haven so, it was no surprise that in the years leading up to the outbreak of World War Two, Switzerland became a haven for the wealth of Europe. What was a surprise was the fact that by the Spring of 1940, the U.S. had become a haven for Swiss wealth.

Fearing a German invasion, Swiss banks began to transfer much of their wealth out of Switzerland and to the U.S., with most of it coming to New York. By the late 1930s, serious concerns had arisen in Switzerland about the extent of Hitler’s aggression. Plans were initiated to protect assets on deposit in Switzerland in the event Germany attacked.

In 1939, Swiss Bank Corporation opened the first Swiss bank in the U.S. with an office located at 120 Broadway in lower Manhattan, around the corner from Wall Street. Interestingly, this space was chosen because it was once the home of the Federal Reserve Bank and thus had enormous underground vaults which proved necessary for Swiss Bank Corp. given the large transfer of assets they had from Switzerland to New York. A year later, Credit Suisse opened its office nearby so it too could better manage the assets which it was transferring to New York.

The Banking Department’s investigative goals were clear: Identify those assets transferred to New York during that period and determine to what extent they consisted of assets belonging to victims of the Holocaust.

As many of you know, it was during the course of this investigation that Swiss Bank Corp. and Union Bank of Switzerland announced their intended merger. At the same time, several class action lawsuits filed by Holocaust survivors and their heirs were pending against the banks in NY Federal Court. Since the NYSBD licensed and regulated SBC and UBS, it was necessary for them to file an application and obtain the approval of the Banking Board if the new entity were to operate in NY State. This allowed the Department to take a closer look at the issues surrounding the lawsuit and raise any concerns we had since character and fitness of management is a consideration. We also focused on the cooperation by the two institutions with the Department’s investigation and with their handling of claims from our Holocaust Claims Processing Office. Initially, I was opposed to the merger given the banks’ track record of cooperation. Indeed, both SBC and UBS were subjected to Consent Orders by the Banking Department as a result of their earlier shortcomings. Moreover, we felt there was more that could be done by way of their handling of claims from Holocaust survivors and their heirs. These concerns were spelled out in no uncertain terms to Mattias Cabialavetta and Marcel Ospel, the CEO’s of both institutions, when they came to NY and met with me.

As a result of the continuing attention to this matter by my office, the planned merger date was delayed by approximately four months. More than that, the consummation of the merger itself became uncertain. It was only after those issues were addressed that I recommended approval of the merger to the Banking Board.

Early in the investigation, the Department began to focus on the needs of the survivors who already had filed claims with the banks in Switzerland. This issue had been discussed during previous visits with the banks in Switzerland, the Swiss Federal Banking Commission, the Swiss Bankers Association, representatives of the Volcker Commission and other Swiss Government officials.

However, it was one meeting in particular which led to the entry of the Department into the unanticipated area of establishing a claims assistance office for Holocaust survivors and their heirs. That meeting was with the Zurich-based Swiss Banking Ombudsman.

Created by the Swiss Bankers Association, the Swiss Banking Ombudsman’s job was to serve as the central receiving point for all claims by Holocaust survivors and their heirs seeking to recover assets still held by the banks in Switzerland. My predecessor, Superintendent Neil Levin, along with Department staff, met with the Ombudsman in 1997. The education we received on his claims process made it painfully clear that a better process was needed.

Initially, there was the fee. Before this Ombudsman would even accept a claim, the claimant was required to pay anywhere from 100 to 300 Swiss francs. Once the claim was received, it went through a "screening process" after which it was added to a list of the names that was circulated to the banks in the form of an inquiry as to whether any of the names appeared as customers of the banks.

There was no follow-up, no accountability and no verification of either the manner by which the searches were conducted by the banks, or even if such searches were conducted. The Ombudsman had virtually no authority and very little resources, thereby inviting inevitable failure.

In addition to this "education", we also met with survivors and heard of their experiences and hardships when they attempted to pursue these claims on their own. The traditional legalistic responses and the unreasonable documentary demands imposed upon them virtually ensured that their claims would be rejected.

The rationale for establishing such unreasonable documentary demands is unfathomable to me unless restitution was never intended to be made. Given the care and foresight exercised by the banks to protect their assets from a possible German invasion, such requirements coupled with a total lack of help from the Ombudsman, was a fundamental breach of faith with the Holocaust survivors.

All of this made clear the need for a cost free office to assist them and advocate on their behalf and hence the idea for the Holocaust Claims Processing Office was born. This idea was presented to Governor Pataki in May of 1997. The Governor embraced it and supported it wholeheartedly and ensured that it became a reality. Three months later, its doors were opened.

It has a separate office within our NYC building and a full-time staff of ten persons plus five interns. Combined, the staff is fluent in eight languages. They are well versed in the applicable historical, legal, financial and technical issues that are inherent in such undertaking. Many have had prior experience with Holocaust survivors and they all possess the unique communicative and social skills necessary to ensure that each and every claimant knows they have a committed advocate working for them. More than half of the staff have post-graduate degrees and all of them are dedicated to the work of the office.

The office has a national toll free number (1-800-695-3318) and our services are not limited to New York State residents. Indeed, the services are not even limited to U.S. residents and we presently have claims from more than 30 nations worldwide. I must admit that I was somewhat struck by the fact that we actually have claims from Switzerland. As for the United States, we have claims from 48 of the 50 states.

The fate of Holocaust victims insurance policies have also become a prominent issue. Since we already had a claims assistance framework in place as well as some expertise in insurance matters, we decided to accept those claims as well.

Recently, the office became involved in a third area when we began accepting claims from Holocaust victims and their heirs seeking the recovery of looted artwork. We are fortunate to have an art historian on staff and so we were prepared to address the unique issues which such claims bring.

I am very proud of the staff. They are constantly called upon to assist other organizations, and even governments, which are addressing Holocaust asset issues. In fact, several staff members serve as advisors to the Eagleburger Commission which was created to search for unpaid insurance policies issued by European insurance companies.

The claims office has essentially inserted itself between the claimants and the Swiss banking community and investigates and pursues those claims it receives.

Much thought and planning went into the creation of the office and unfortunately, since no government entity had ever opened such an office, we had no models to draw upon. On the one hand, we very much wanted to provide as much assistance as possible to the survivors and their heirs, but on the other hand, we had to accept the fact that more than fifty years had passed and thus, documentation, to the extent that it still existed would be fragmentary. Indeed, the staff of the office is extremely sensitive to this and managing the expectations of the claimants is an important part of what they do.

On the other hand, I must admit that we have been pleasantly surprised with the amount of documentation that has been found to exist and this is where the unique abilities of the staff have proven to be so vital.

The office does not simply collect names and pass them on to the banks and the insurance companies. Once a claim has been received, it is analyzed and where possible, augmented. Unlike the office of the Swiss Banking Ombudsman, our staff attempts to obtain additional information which may provide greater insight into the location of a particular account or insurance policy. Many of the staff members are particularly skilled at research in this area and have contacts in important archives all over the world. This has enabled us to obtain information critical to locating a particular account or insurance policy.

For example, in one case we obtained an appropriate restitution of bank account monies for a 95-year-old Holocaust survivor living here in New York. In light of her age, when the claim was first received, one of the Claims Office staffers went up to her apartment and interviewed her at length. During the course of the interview, it was disclosed that the woman and her family had purchased several insurance policies before the war, unfortunately, she did not know the name of the company and thus did not file a claim in connection with those policies. After making some inquiries with contacts in an archive facility in Europe, the staff soon located an enormous amount of information about the family and this included the name of the insurance companies where the policies were purchased.

In another case, we succeeded in obtaining the return of the contents of a bank account to the heirs of the account holders, two Romanian Jews who were murdered in Auschwitz in 1942. Initially, the heirs did not receive all the existing documentation for the account, but following the entry of our office, additional documentation was "discovered." As it turned out, the bank account remained dormant all these years and it was only after the intervention of our office that the bank finally returned the contents of the account to the appropriate heirs with appropriate compensation for the passage of more than fifty years. By doing some additional research, my staff determined that this family also had assets deposited in England and efforts are now underway to ensure the return of those assets as well.

Often it takes just a few probing questions by an informed individual to obtain that piece of information which is necessary to identify a bank or insurance company name and this explains why much of the claims staff time is spent on the phone speaking with claimants. Throughout Nazi occupied Europe, it was a capital offense to have a Swiss bank account. This in part explains why so many claimants, who are often the children of Holocaust victims, do not know the name of the bank where the account was opened. Owners of such accounts went to great lengths to keep this information secret. Unfortunately, when these people were killed, their secrets died with them. Although the identity of the insurance companies is also a problem for claimants, it is not nearly as great a problem as on the bank side because there was nothing inherently secretive about owning insurance during that period. In fact, we do see many claimants who not only know the company names, but still actually have the original policies.

The office has now been opened for almost two years and the response has been overwhelming. We have received in excess of 5,000 inquiries and more than 3,000 completed claim forms and we have now reached the point where monies are starting to be returned to their rightful owners.

I have repeatedly stated publicly that there is nothing more fundamental to the role of a bank regulator than ensuring the protection of customer deposits. This holds true whether the deposits were made five years ago or fifty years ago. In the context of Holocaust survivors, this is especially true. And while we have had success in our efforts to ensure the full cooperation of the banks with our investigation and with our Holocaust Claims Processing Office, more needs to be done.

In August of 1998 the class action lawsuit filed by survivors was settled for $1.25 billion. Sadly, eight months have passed and little progress has been made to ensure that the settlement monies go into the hands of the survivor community. It was only two weeks ago that a special master was finally appointed to come up with a distribution plan. That process will take additional time, but unfortunately, time is not a luxury Holocaust survivors have. With an average age of eighty, their numbers are slowly dwindling. Words cannot express the anguish experienced by my staff when they learn that yet another one of their claimants has died before their claim could be resolved. I can only implore those involved in the distribution process to work swiftly and expeditiously so that those who have sought justice for so long may live to see it.

Equally disturbing is the conduct by some of the class action attorneys. What started out as a noble effort to obtain justice for Holocaust victims has turned into a quest for personal profit. A distribution plan has not even been put into place and already there are attorneys calculating their fees, some of which run into hundreds of millions of dollars. Moreover, additional lawsuits have been filed against German, French and American banks as well as against a number of large multinational corporations and with those suits come additional quests for profit.

Notwithstanding earlier representations that they would act pro-bono or would merely seek reimbursement of their expenses, we now see some attorneys speaking of fees in terms of percentages of settlement amounts. I can only hope that my outrage at this state of affairs is shared by others and that steps are taken to ensure that any and all settlement monies go into the hands of the survivors and not the pockets of the lawyers.

Needless to say, the work of the New York State Banking Department on behalf of Holocaust survivors is, and will remain, a top priority, both within the Department and New York State as a whole. As I noted at the outset, it is not often that we as regulators have to opportunity to participate in a quest for justice on behalf of a group of people to whom it is so long overdue. I am particularly proud to be a part of this piece of history.

I would again like to thank you for the invitation to speak about the Banking Department’s work on behalf of Holocaust victims and I would encourage you all participate in this endeavor in whatever way you can. Thank You.


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