Sen. Elizabeth Warren, D-Mass., and bane of the big banks, is throwing her weight behind a new campaign: New York’s search for a new financial regulator. Alongside more than a dozen consumer advocacy groups, Warren is pushing Gov. Andrew Cuomo to select a Wall Street watchdog with as much bite as the outgoing Benjamin Lawsky.
Cuomo’s pick could carry on a regime of unusually fierce state-level financial oversight in the banking capital of the world -- or usher in the more restrained approach favored by industry and some federal regulators.
The coalition of advocacy groups, which includes the state’s teachers union, hopes it’s the former. They even have a name in mind: Rohit Chopra, who recently stepped down as student-loan ombudsman at the Consumer Financial Protection Bureau (CFBP).
Sen. Warren, who hired Chopra to the fledgling agency in 2011, recently called him “smart as a whip, independent, hard-working and loaded with integrity.” The senator has even made calls to Cuomo’s office lobbying on Chopra’s behalf, the Wall Street Journal reports.
Chopra, 33, would have large shoes to fill. Lawsky turned the newly created position of superintendent of New York’s Department of Financial Services into a bank-industry overseer to rival the Securities and Exchange Commission.
With headquarters in Wall Street's own backyard, Lawsky leveled some $6 billion in fines on banking titans in four years and took swipes at federal regulators for what he characterized as “deeply disappointing” oversight. He even earned a new title: the Sheriff of Wall Street.
But some in the banking community grumbled that Lawsky’s efforts amounted to prosecutorial overreach and grandstanding. In a controversial practice that became routine, Lawsky twisted banks' arms by threatening to rip up their licenses to operate in a global financial hub. In one case, the tactic won Lawsky a fine that was nearly 30 times what federal regulators had demanded from the miscreant firm.
Though his office lacks the ability to bring criminal charges against individuals, Lawsky pressured banks to fire executives who found themselves in his crosshairs. “To get real deterrence, we need to have individuals who are personally held to account,” Lawsky has said.
At the CFPB, Chopra also cultivated a bulldog reputation. He was known for sparring, sometimes heatedly, with companies active in the $1.3-trillion student loan industry. In scathing reports, Chopra’s office blasted the industry and pushed for lower interest rates and friendlier loan terms.
“He’s really willing to weather criticism from the industry,” says Kurt Walters, campaign manager for the advocacy group Rootstrikers, which targets money in politics. “You hear complaints from the student lending industry saying, ‘Gee, isn’t he being tough on us?’”
Other names that have been floated in the recruiting process have more traditional industry backgrounds. Among them are Jonathan Schwartz, a former JPMorgan Chase executive and Bridget Healy, the chief U.S. lawyer for Dutch bank ING. Two former regulators who have moved into private law are also reportedly on the short list.
Though it’s common for regulators to shuttle between government agencies and the private industries they police, that revolving door has come under increasing fire from advocacy groups. Earlier this week Rootstrikers released a 65-page report slamming Securities and Exchange Commission chair Mary Jo White over charges of lax enforcement and conflicts of interest.
White, who carried a tough-on-crime reputation when she joined the SEC, had also served for years as corporate defense lawyer at Debevoise and Plimpton. It’s the type of pedigree Walters and others hopes Cuomo avoids in his next pick.
“It would be a shame to take a step back,” Walters says.
On June 30, Lawsky will pass his position temporarily to his chief of staff, Anthony Albanese, as Cuomo’s search concludes. Lawsky is leaving to form his own legal and consulting firm.