Benjamin Lawsky, outgoing superintendent of the New York Department of Financial Services (NYDFS), bid a final farewell to his team last night. He tweeted:
— Ben Lawsky (@BenLawsky) June 17, 2015
Lawsky, dubbed by the New York Times as the “Sheriff of Wall Street”, began service as the Department’s first head in 2011. It was then that the Department was formed by Governor Andrew Cuomo, consolidating the New York State Insurance Department and New York State Banking Department. The stated intention behind the move was to modernize regulation by enabling the body to oversee a wider array of financial services. Events of the 2008 financial crisis reportedly motivated action for greater transparency.
Lawsky was known for taking a tough approach with Wall Street, the New York Times describing his tenure as “grim” for banks. He will be remembered by many for threatening to revoke state licenses for some of the world’s largest banks and dishing out over $6 billion in penalties.
In recent years, he became well-known in the Bitcoin community for efforts to introduce ‘BitLicense’ regulations for businesses dealing in virtual currencies. The regulations were finalized two weeks ago, in time for his departure. The notion of regulation was welcomed by some, particularly large companies with an institutional focus, but maligned by many alleging that the rules are burdensome and will stifle innovation.
Ironically, Lawsky’s tough stance with banks made him popular with critics of Wall Street, including the Occupy Wall Street movement. Yet, he has struggled to find favor in the eyes of much of the digital currency community, despite its general hostility toward traditional banks.
Rumors of his departure first circulated late last year, and suggested that he may leave as early as this past January. Reports were confirmed last month, about two weeks before the final BitLicense regulations were released. He is reportedly planning on starting his own private legal and consulting firm and serving as a lecturer at Stanford University. While superintendent at NYDFS, a 2012 Wall Street Journal report stated his annual salary at $127,000.
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Finding a Successor
There has been speculation as to who will succeed Lawsky in this now powerful role. At first glance, Wall Street should be delighted with his exit. But several of the candidates that have been mentioned may prove to be equally or tough cookies, or even tougher.
For now, Anthony Albanese, Lawsky’s chief of staff, will serve as acting superintendent. He served as the main negotiator for all bank enforcement actions led by Lawsky. Among them was the $8.9 billion penalty against French banking giant BNP Paribas by the US government for sanctions violations, a record sum at the time. Fallout from the 2014 action included the bank temporarily losing its ability to process dollar- denominated transactions in the state.
Following is Lawsky’s full memo to his team:
“Dear DFS Team,
As you all know by now I will be transitioning out of my role as Superintendent next week. I am pleased to report that when I depart, Anthony Albanese, my Chief of Staff, will take over as the Acting Superintendent while the Governor’s office conducts a search for a permanent replacement.
Most of you know Anthony well. He has been by my side since we launched and has played an incredibly important role in getting DFS to where it is today. Anthony has helped lead DFS since the day he got here in 2011. He is tough but fair and passionate about doing what’s right. His appointment for this period as Acting Superintendent means business as usual for the Department.
I know that under his leadership DFS will continue all of the important initiatives we have under way while also continuing to be a smart, modern, and forward-thinking prudential regulator. I also know that you will each continue to carry out the Governor’s vision for DFS in the months and years ahead. I can’t wait to watch all that you do.
Now everyone please get back to work.