N.Y. Gov. Spitzer Vows to Modernize State’s Financial Services Regulation

May 31, 2007

New York Governor Eliot Spitzer has created a commission to identify ways for New York to enhance its status as a world financial capital by modernizing its regulatory scheme and perhaps merging state regulation of insurance, banking and securities.

“The financial world has changed and we must change with it to retain our leadership position,” Spitzer said. “This panel will help the state bring its regulatory structure into the 21st Century, encouraging the use of cutting edge technology and techniques to provide capital, insurance and other services to companies and individuals around the country and the globe.”

The New York State Commission to Modernize the Regulation of Financial Services, which includes representatives from industry, consumer groups and government, has been asked to review all current financial services statutes, regulations, rules and policies and propose legislative and other necessary changes, according to Spitzer.

State Insurance Superintendent Eric Dinallo will chair the new commission. “Current laws and regulations in New York do not work for the industry or the consumer. Financial services companies claim that they face unnecessary regulatory hurdles in bringing new products to market. Consumer advocates claim that public awareness about the risks and costs of what are fundamentally the same financial products can vary depending upon the state agency that is doing the regulating,” Dinallo said. “We must develop new laws and regulations that promote competition and the growth of business, while effectively protecting both consumers and honest businesses from unfair or unethical practices.”

Four separate New York state agencies—the Insurance Department, the Banking Department, the Department of State and the Attorney General’s Office—all regulate the financial services industry. This regime of state regulation was created at a time when federal laws (such as the now repealed Glass-Steagall Act) restricted the commercial activities of financial services firms, financial markets were fragmented and largely national rather than global in scope, and the activities of banks, insurance companies and securities firms were more distinguishable.

Critics believe the current structure results in burdensome and inconsistent state regulation, which drives up the cost of doing business, treats functionally equivalent business activities inconsistently, and fails to effectively protect consumers.

The commission will be charged with identifying ways in which regulatory powers could be integrated, rationalized, and changed in order to promote economic innovation and protect the consumer.

Spitzer named CEOs from AXA Equitable, American International Group and MetLife to the panel along with representatives from banking, securities, legal, consumer, and regulatory and business communities.

The commission staff will include experts from industry, consumer organizations and government. They will be organized into working groups by topic and asked to review all current statutes, regulations, rules and policies and compare them to best practices.

The commission is to make detailed recommendations for administrative and legal reform by June 30, 2008.

Members of the N.Y. State Commission to Modernize The Regulation of Financial Services:

Herbert M. Allison, Jr., Chairman, President and CEO, TIAA-CREF
Christopher M. Condron, Chairman and CEO, AXA Equitable
C. Robert Henrikson, Chairman of the Board, President and CEO, MetLife
Martin J. Sullivan, CEO, American International Group

Lloyd C. Blankfein, Chairman of the Board and CEO, The Goldman Sachs Group
Stephen M. Cutler, Executive Vice President and General Counsel, JPMorgan Chase
Charles Prince, Chairman and Chief Executive Officer, Citi

Michele F. Imbasciani, Senior Vice President Region Executive, New York Metro Region, Banco Popular N.A.
Thomas A. Renyi, Chairman and CEO, Bank of New York
Seth Waugh, CEO, Deutsche Bank Americas
Robert G. Wilmers, Chairman of the Board and CEO, M&T Bank Corp. Deborah C. Wright, President, Carver Federal Savings Bank

Business Community and Consumers
Kenneth Adams, President and CEO, Business Council of New York State Inc.
Stephen Brobeck, Executive Director, Consumer Federation of America
Sarah Ludwig, Executive Director, Neighborhood Economic Development Advocacy Project
Kathryn Wylde, President and CEO, Partnership for New York City

Lawyers with Financial Services Expertise
H. Rodgin Cohen, Chairman, Sullivan & Cromwell, LLP
Wolcott B. Dunham, Jr., Partner, Debevoise & Plimpton, LLP
Theodore A. Levine, Of Counsel, Wachtell Lipton Rosen & Katz
John W. Moscow, Partner, Baker & Hostetler, LLP
L. Edward Shaw, Jr., Senior Managing director of Richard C. Breeden & Co.

Mindy Bockstein, Chairperson & Executive Director, NYS Consumer Protection Board
Eric Corngold, Executive Deputy Attorney General for Economic Justice
Lorraine A. Cortés-Vázquez, Secretary of State
Eric R. Dinallo, Superintendent of Insurance, Chair of the Commission
Patrick Foye, Chairman, Empire State Development Corp.
Timothy F. Geithner, President, Federal Reserve Bank of New York
Robert Hermann, Director, Governor’s Office of Regulatory Reform
Richard H. Neiman, Superintendent of Banks
Mary Schapiro, Chairman and CEO, NASD
Diana L.Taylor, Managing Director, Wolfensohn & Company, LLC, former state Superintendent of Banks

State Legislature
Chairs of the Senate and Assembly Committees on Banking and Insurance

Source: New York Governor’s Office

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