Vullo to Step Down as New York Insurance Regulator; Gov. Cuomo Weighs Successor

By | December 20, 2018

Maria Vullo is stepping down as head of New York’s banking and insurance regulator, she said in an interview, after three years in which she created a national model for cybersecurity regulations at banks and fought back against federal attempts to chip away at Obamacare and payday-lending rules.

Vullo, the superintendent of New York’s Department of Financial Services, will leave on Feb. 1.

New York Governor Andrew Cuomo hasn’t chosen a successor, although he’s considering his chief of staff, Linda Lacewell, for the job, according to the Wall Street Journal.

“It’s been a great three years,” Vullo said in the interview. “I am immensely proud of the depth of the work done in every division of this agency.”

Maria Vullo

After taking office in early 2016, Vullo prioritized consumer protection and implementing rules requiring banks to keep cybersecurity defenses up to date. After Donald Trump was elected president with a promise to roll back the Affordable Care Act and loosen financial regulations, she channeled her efforts into protecting health-care access and enforcing state restrictions on payday lending.

“As head of DFS, Superintendent Vullo has been a fierce advocate for New Yorkers at a time when the federal government has chosen to put corporations before people,” Cuomo said in a written statement.

Trump Election

The morning after the election, Vullo, a Democrat, convened an executive meeting at DFS. “We took that moment, which could have been crisis, and determined that we were going to protect New Yorkers in the face of what the federal government was going to do,” she said.

Vullo collected more than $2.8 billion from enforcement actions against financial institutions, mostly foreign banks, for violations of U.S. sanctions, anti-money-laundering laws and the Bank Secrecy Act. She maintained positive ties with New York’s business community in contrast with her predecessor, Benjamin Lawsky, who drew banks’ ire as he tallied $6 billion in penalties over four years.

“The business community generally and the financial industry in particular has really greatly appreciated the expertise and the balance that Maria has brought to that job,” said Kathryn Wylde, chief executive officer of the Partnership for New York City, a advocacy group for businesses. “She has enforced laws fairly but not punitively. She’ll be very much missed.”

Fixing Strains

Vullo also formed strong working relationships with the U.S. Department of Justice, the Federal Reserve and the Manhattan district attorney’s office. Some of those ties grew strained under Lawsky, who sometimes moved before his fellow regulators on enforcement actions.

“Maria has taken a broad view,” said Brad Karp, chairman of Paul Weiss, where Vullo worked before joining DFS, “building much-needed bridges with other regulators and enforcement agencies, successfully working with (and not against) the industry to address conduct-related issues, and focusing on long-overdue initiatives, including in the area of cybersecurity.”

Not all those relationships were smooth. DFS is currently litigating a case involving Bank of Tokyo Mitsubishi UFG, which converted its state license last year to a federal charter issued by the U.S. Office of the Comptroller of the Currency.

The OCC approved the application for transfer in eight days, catching the New York regulator by surprise. A similar approval for UBS AG took months. In court filings involving the bank, Vullo objected to the removal of the outside monitor she appointed to oversee Bank of Tokyo’s sanctions compliance program. The litigation is pending.

‘Vigorous Enforcement’

“I believe in vigorous enforcement of the law,” Vullo said of the Bank of Tokyo/OCC battle. “An institution should not be able to flip a charter for purposes of evading enforcement by state regulators.”

The bank and the OCC say the conversion was done to simplify the bank’s regulatory structure in the U.S., where it had multiple state licenses and one national charter for its consumer bank in California

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