N.Y. Regulator Proves She's Not Just 'Acting'
Gold, Jacqueline S., American Banker
In the three years since her former boss left to become New York State's top insurance regulator, Elizabeth McCaul has filled in as the state's banking superintendent and waited for the word "acting" to be taken out of her title.
She has overseen the state's 3,500 financial institutions, listened to the seemingly endless complaints of financial executives and consumer groups, and occasionally placated political bosses in Albany and Washington. In addition she has promoted, with the zeal of a recent convert, the virtues of the state banking charter.
When Neil D. Levin, who had been a colleague of Ms. McCaul's at Goldman Sachs in their pre-regulatory days, left the State Banking Department in 1997, rumor had it that she would soon follow and continue as his lieutenant -- at the Insurance Department. There was even talk that the two agencies would merge, with Mr. Levin taking over as some sort of super-regulator.
But the idea of regulatory convergence soon died, and Ms. McCaul remained acting superintendent of banking month after month.
In that role she surprised everyone with her leadership ability, and in December she finally received Gov. George Pataki's nomination to hold the job for real. The state Senate is expected to approve her appointment this session.
Bankers in New York seem pleased with the decision. "The Pataki administration has been in office for nearly six years," says Michael P. Smith, president of the New York Bankers Association. "Elizabeth has been in that department for that entire period of time. We have extended experience with her, which has led to openness and dialogue. The department is always amenable to hearing our views. She's very energetic, she enjoys her job, and she's not afraid to speak her piece. That's good for the industry."
Even more impressive is that while bankers have been relatively happy with Ms. McCaul's performance, so have their sometime foes: the state's community groups.
Sarah Ludwig, executive director of the Neighborhood Economic Development Advocacy Project, says, "To her credit, Elizabeth McCaul has been remarkably approachable. She listens a lot and takes lots of notes. She's very respectful. She doesn't fit the profile of a regulator who won't meet with community groups."
Matthew Lee, executive director of the Inner City Public Interest Law Center, goes even further. "I've been surprised by some of the things she's done on a consumer basis, because she's a Republican appointee," he said. "She's actually reached out to groups, invited them to lunch, gotten their views. You don't see that at other agencies. She's aware of Community Redevelopment Act issues and she raises them. The Banking Department, on its own initiative, has gotten CRA commitments from banks. She's more attentive to CRA than one would expect. It's a different kind of Republicanism."
Ms. McCaul, 38, is in the midst of a juggling act: balancing the needs of New York's financial services consumers while extending the life of the state banking charter, at a time when many feel financial reform and multi-state branching have rendered the dual banking system obsolete.
She says she is the state charter's "biggest fan," though she too was skeptical about its relevance when she first joined the Banking Department as Mr. Levin's chief of staff in 1995. "We have an incredibly unique banking system in this country, that has created a very prosperous economy," she said recently, in an interview in her spacious office near Trinity Church in downtown Manhattan. "The dual banking system provides a check and balance, creates competition, and spurs innovation."
To keep the charter attractive and the New York Banking Department in business, Ms. McCaul works hard to promote legislation, such as the so-called wild-card statute, which gives state banks the right to pursue the same activities as national banks.
In addition to an open-door policy for banks and consumer groups, Ms. …