New York Governor Andrew Cuomo signaled a shift in New York’s oversight of Wall Street, tapping a longtime corporate lawyer to run the state banking regulator previously overseen by an aggressive career law enforcer.
Cuomo on Jan. 21 nominated Maria Vullo, a 52-year-old attorney, to run the state’s banking and insurance regulator, the Department of Financial Services.
That came more than six months after the exit of the regulator’s first chief, Benjamin Lawsky, whose shadow continues to hang over the office. In four years, Lawsky extracted $6 billion in settlements from financial institutions, threatened to pull the charters of some of the world’s biggest banks and broke ranks with other enforcers by aggressively pursuing settlements.
Vullo spent about a year in government under Cuomo starting in 2010, when he was New York Attorney General and she led his economic justice division. She spent much of her career at law firm of Paul Weiss Rifkind Wharton & Garrison LLP in New York, where her clients have included Citigroup Inc. and other corporations.
Citigroup, which isn’t regulated by the DFS, didn’t immediately respond to a request for comment.
“The debate’s going to be, will she be the next Ben Lawsky?” said Sean Coffey of Kramer Levin Naftalis & Frankel LLP, who’s known Vullo for several decades. “No, she’s going to be Maria Vullo. And that’s a great thing for the taxpayers of New York and the people that are regulated by DFS.”
Vullo declined to comment on her nomination, which requires approval from the state senate.
“I look forward to working with the talented men and women at DFS to strengthen our markets and protect investors and consumers from unlawful business practices,” Vullo said in a statement on Jan. 21.
A representative from Cuomo’s office didn’t immediately comment. In a statement, Cuomo said Vullo has “the right combination of public and private-sector experience needed to lead the Department of Financial Services.” He added that he believes she will be a “strong and tireless advocate for the people of New York.”
Vullo would bring stability to an office in flux. Lawsky announced in May that he would step down, and he was replaced the next month with an interim superintendent, Anthony Albanese, who stayed through November as the search for a replacement dragged on. Coffey declined to comment on reports last fall that he’d been approached by Cuomo’s office to discuss the DFS position.
After becoming governor in 2011, Cuomo created DFS by combining the state’s banking and insurance departments. While the U.S. Office of the Comptroller of the Currency regulates national banks, the DFS regulates those chartered in New York, including many of the biggest international banks. Cuomo named Lawsky as its first superintendent.
Over four years, Lawsky’s DFS took a lead role in a string of settlements with European banks over violations of U.S. sanctions laws against Iran and other states. The $6 billion Lawsky racked up in fines and penalties became a financial windfall for Cuomo and the state legislature.
However, as multibillion dollar settlements started to lose their bite, Lawsky found ways to tailor punishments to the crimes, including forcing banks to terminate executives and agree to operational bans for units responsible for misconduct. He also insisted on inserting monitors at banks to curb repeat offenders. He upstaged fellow regulators in 2012, when he broke ranks with local and federal enforcement officials over settlement negotiations with Standard Chartered Plc for sanctions violations.
Lawsky’s reputation for aggressive enforcement was such that last summer’s nuclear agreement with Iran contained a paragraph that appeared to warn state regulators against deviating from U.S. goals, a reference that several lawyers said was directed at him.
Several representatives of New York’s financial community voiced concerns to Cuomo’s office over what they characterized as Lawsky’s aggressive enforcement practices, people familiar with the matter have said. These people warned that some of the fines levied on banks led to job losses in the city and cast a cloud over the state’s reputation as an attractive location for business.
When Lawsky stepped down in June to start his own consulting business and Albanese was named as interim head of the office, Lawsky said he was pleased that it would be “business as usual” at DFS after he left.
Over the past decade some of the state’s regulatory authorities had been unduly harsh in their enforcement actions against businesses, sometimes for political reasons, said Kathryn Wylde, president and chief executive officer of the Partnership for New York City, a network of chief executive officers.
“I don’t think anyone would think of Maria Vullo as someone who will follow a political agenda, said Wylde. “That’s all the industry can ask.”