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New York Senate Confirms State's Financial Services Regulator

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Linda Lacewell was confirmed Thursday evening as the new superintendent of the New York State Department of Financial Services, the agency that regulates banking, securities and insurance in New York state.

Gov. Andrew Cuomo, a Democrat, nominated Lacewell to succeed Maria Vullo earlier this year.

(Related: New York Department of Financial Services Head Vullo to Depart)

“It is an honor and a privilege to be confirmed as superintendent of the Department of Financial Services,” Lacewell said. “I thank Governor Cuomo and the members of the New York state Senate for the opportunity to lead this essential agency, and I look forward to working with the entire Legislature at a time when it has never been more important to protect consumers, safeguard markets, enforce the law and encourage real financial services innovation.”

Lacewell, who was most recently a former top aide to Cuomo, took the helm of the agency in February, after Vullo, the former superintendent, left the post.

Lacewell has worked with Cuomo in various capacities for more than a decade. She first joined his team when he took office as New York state’s attorney general in 2007.

Before entering state government, Lacewell spent nearly a decade as a federal prosecutor in Brooklyn. While there, she was a member of the Enron Task Force, a panel of federal prosecutors and investigators responsible to reviewing what caused Enron Corp., an American energy company, to file for bankruptcy in 2001.

The task force brought fraud, money laundering and other charges against more than two dozen officials at the company. Lacewell led a settlement as part of the task force with the Canadian Imperial Bank of Commerce, which was allegedly used by Enron to raise its stock price without actually earning more profits by obtaining assets and loans from the bank.

She was most recently chief of staff to the executive chamber under Cuomo. She was in charge of overseeing the day-to-day operations of the chamber, and was widely considered one of Cuomo’s closest advisers and a powerhouse among her colleagues.

Lacewell was previously the state’s first chief risk officer, a position she took in 2015 under Cuomo. She served as his counsel when he was state attorney general, and reprised that role when he became governor in 2011.

She will be the third person to serve as superintendent of the state Department of Financial Services. The agency was created in 2011 as a combination of the state’s former banking and insurance agencies.

The department has been seen as a major revenue-raiser for the state at times. Going into the 2015 legislative session, the agency had collected more than $4 billion in financial settlements from multinational financial institutions that had violated the state’s laws and regulations. For comparison, the state budget that year was nearly $150 billion.

The New York department also has tremendous power over health insurance companies regulated by the state. Aside from approving annual rate hikes requested by insurers, the department can create new regulations for health coverage in New York.

When Lacewell testified before the Senate Finance Committee on her nomination last month, she said she was also particularly interested in the ever-growing financial technology industry, more commonly known as fintech, which the New York department also regulates.

“It’s actually the job of DFS not only to regulate banking and insurance, but to keep an eye out for emerging products like bitcoin, fintech and other areas,” Lacewell said. “It’s part of our responsibility to look there to identify those issues and to try to responsibly regulate in a careful manner.”

Virtual currency companies have to go through the New York department for a license before they’re allowed to operate in New York, for example. But the department has also been active in monitoring and promulgating regulations to protect the data privacy of consumers in the state, and pursuing enforcement actions when it’s put at risk.

Lacewell, for her part, has hit the ground running at the department, already forming a diverse executive staff. Insiders at the agency have said that when Lacewell started as acting superintendent in February, she said she wanted to make diversity a priority in forming her team. She followed through last month with a series of appointments.

— Read Linda Lacewell Could Oversee New York State’s Sales Standards, on ThinkAdvisor.

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