Wednesday, August 8, 2012

Benjamin Lawsky: Eliot "Rogue Regulator" Spitzer 2?

The recent high profile allegations that Standard Chartered Plc conducted over $250 billion in money laundering transactions tied to Iran came about because of Benjamin Lawsky, head of the recently created New York State Department of Financial Services. He's only been in the position since May!

Reportedly, the Treasury Department and Federal Reserve are furious at Lawsky's move.

Reuters writes:
Lawsky's stunning move, which included releasing embarrassing communications and details of the bank's alleged defiance of U.S. sanctions against Iran, is rewriting the playbook on how foreign banks settle cases involving the processing of shadowy funds tied to sanctioned countries.
Aside from the question of why the U.S. government is involved in regulating how multinationals deal with foreign countries and corporations, Lawsky seems to be taking the matter to an even more aggressive regulatory level. The Fed and the Treasury in the past would harass multinationals but ultimately settle with them quietly. It appears that's not going to be the style for Lawsky.

Do we have an Eliot Spitzer 2 on our hands that will attempt to shakedown any financial organization for any reason for just one more headline? Quite possibly. There's a lot wrong with the financial sector and the elements of it that cozy up with government. The way to solve this problem is to tear down the moat of regulations that prevent true competition. Lawsky, on the other hand, is about aggressive enforcement of regulations to make a name for himself. Government enforcers like Lasky are very dangerous guys. They never stop enforcing any regulation on the books, no matter how destructive the regs are.


  1. Lawsky got his start in Chuck Schumer's office. This is a Team Israel move.

  2. Every law and every regulation should be tirelessly and vigorously enforced. If we did that, we would soon repeal most of those laws as nothing would function. Secondly, giving enforcers discretion simply amounts to arbitrary rule. Law making no longer matters because it becomes the law enforcers who decide what actions shall, or shall not, be punished.

  3. Ruthless self promotion for Lawsky and nothing to do with crony capitalism. NY stands to gain a lot if they can knock London off as the world's premier financial center.