Wall Street Regulator Says He'll Go After People, Not Corporations
New York's "aggressive" top bank regulator Benjamin Lawsky is ready to go after specific people on Wall Street for unfairly burdening homeowners and helping foreign banks violate U.S. sanctions. He'd also like to regulate Bitcoin.
New York's "aggressive" top bank regulator Benjamin Lawsky is ready to go after specific people on Wall Street for unfairly burdening homeowners and helping foreign banks violate U.S. sanctions. Lawsky tells the Financial Times that his strategy is name-and-shame: "Corporations are a legal fiction. You have to deter bad individual conduct within corporations. People who did the conduct are going to be held accountable."
Lawsky was Gov. Andrew Cuomo's chief of staff prior to forming the New York Department of Financial Services. The DFS, however, does not have criminal authority. Lawsky will have to rely on fines and other civil measures to punish bad actors. He thinks this strategy will actually attract more businesses to New York, because getting rid of toxic individuals will restore Wall Street's reputation. He explains,
We think about it most in the area where there has been some sort of intentional misconduct as opposed to a systemic industry wide problem ... People do cheat. We want to preserve the reputation of our financial sector and make people realize the vast majority of people on Wall Street and banking do good work.
Of course, he won't comment on current investigations. He says the number of existing cases is "not as small as a handful but not dozens."
Lawsky, who is more web-savvy than your average government employee, also wants to regulate Bitcoin. He's participated in Reddit AMAs and Twitter conversations with Bitcoin users to try to learn more about how people are using the cryptocurrency. Lawsky told Reuters last week that he sees the Mt. Gox collapse as an opening:
It's on the one hand a setback, on the other hand it will cause further improvements in this industry and some more regulatory involvement. It's part of [a] shaking out.
On the whole, Bitcoin users would strongly prefer not to be regulated by the U.S. government (that's kind of the whole point). But Lawsky seems to be making the case for regulation better than others — he says he's been working with Bitcoin exchange SecondMarket Holdings on licensing issues.