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Top New York Bank Regulator Rumored to be Stepping Down

LawskyAccording to multiple reports, Benjamin Lawsky, Superintendent of the New York Department of Financial Services, is considering stepping down from his post and entering the private sector in 2015.  Lawsky has made a name for himself by aggressively regulating financial institutions doing business in New York.

The news comes as an investigation of Ocwen's mortgage servicing practices turned up more than 7,000 letters sent to borrowers that had been backdated and sent only after their payment deadlines had passed.

The company has seen tighter scrutiny from Lawsky and other federal and state bank regulators in the last year as they turn their attention to independent servicers, who have grown significantly as banks come under heavier regulation.

Ocwen initially blamed the backdated letters on computer errors. The company said that about 70 percent of the borrowers who received the backdated foreclosure letters received loan modifications and that less than 5 percent of them actually went to foreclosure. The company has taken a $100 million charge in preparation for a potential settlement.

But Ocwen is just a part of Lawsky’s regulatory legacy. In August he fined PricewaterhouseCoopers $25 million and banned them from conducting business in the state of New York for two years following an investigation into their role in helping client Bank of Tokyo-Mitsubishi UFJ cleanse some "illicit money transfers."

Lawsky, who was tapped by Governor Andrew Cuomo to lead the newly formed Department of Financial Services in 2011 and given authority over all state-licensed banks and insurance companies, has not given a timeline for any potential departure. It is unclear at this time who Governor Cuomo will name to fill the position if the resignation is made official.

Requests for comment from Lawsky’s office were not immediately returned.

About Author: Derek Templeton

Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.
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