New York Department of Financial Services, the new department that combines the state’s insurance and banking regulators, was officially launched on Monday, Oct. 3.
Financial Services Superintendent Benjamin Lawsky set the mission and announced the structure of the new department in his speech at a ceremony Monday morning. Lawsky was joined by 19 former banking and insurance superintendents, other officials and hundreds of department staff at the ceremonial event at Pace University in downtown New York City.
The plan for merging insurance and banking departments was adopted six months ago, when the state passed its budget plan in March.
The new department has about 1500 employees, supervising 3900 institutions, which have roughly $5.7 trillion under management.
“The department of financial services has three main goals,” Lawsky said in his speech. These goals are: 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.
“Governor [Andrew] Cuomo’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,” said Lawsky, who was confirmed to the department’s top post in May. He has been serving as acting superintendent of banks, leading the initiative to integrate the insurance and banking departments.
Lawsky told Insurance Journal that the department will continue to regulate under essentially the same laws and regulations, “but it will work to do a better and more efficient job, to make it easier for insurers, brokers and agents to interact with the department.”
The department will seek to work with the local industry to attract more jobs to the state. It will also work with the industry to fight fraud and other misconduct, he said.
Lawsky has been working alongside the governor for a number of years. He was previously the governor’s chief of staff. Prior to that, he served as the deputy counselor and special assistant throughout the administration of then-Attorney General Cuomo.
The new 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.
Stronger Fraud/Consumer Protection Division
Commenting on the financial frauds and consumer protection division, Lawsky said it will have new powers to help consumers on all types of financial products and services. This division brings together the fraud and consumer units of banking and insurance, but also adds important new powers. It now has more investigative and enforcement powers to shut down financial impropriety. It can conduct investigations, research, studies and analyses of issues affecting consumers of most financial products and services.
The department is also creating a new executive level position, director of enforcement, who will oversee all criminal investigations, Lawsky said.
$25 Million in Budget Savings First Year
The Department of Financial Services is expected to save millions of dollars for the state government by eliminating redundancies and boosting efficiency. “I can announce that the new department is on track to achieve more than $25 million in budget savings in just its first year,” according to Lawsky.
“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. That’s necessary to keep consumers protected and keep the institutions we regulate safe, solvent and able to meet their obligations.”
Initiative to Bring More Jobs to Empire State
Lawsky also said his department is partnering with the financial services industry to find the best ways to attract more financial and insurance jobs to New York State. This effort will be led by James Wrynn, who has been New York’s insurance department superintendent. He now becomes the deputy superintendent for financial services.
“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,” Lawsky said.
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