by Atul Hatwal
Ben Lawsky. Remember that name. This week he changed how banks and financial institutions across the world will be regulated.
While the UK relies on esteemed commissions like Vickers or waits for its parliamentarians to stroll through detail of the the Libor scandal, the state of New York has re-defined how to regulate.
Lawsky runs the department for financial services. If a financial institution wants to do business in New York, they need a licence from Lawsky.
This week the superintendent – for that is Lawsky’s title – humbled Britain’s mighty Standard Chartered Bank (SCB).
Eleven days ago he issued an order against SCB on its failure to stop money laundering for Iranian organisations. The order was scathing, stating Standard Chartered was “rogue” and was engaged in “dealings that indisputably helped sustain a global threat to peace and stability.”
The bank pushed back strongly, other regulators briefed financial journalists that Lawsky was over playing his hand and even the governor of the Bank of England Mervyn King weighed in, rebuking Lawsky for his precipitate action.
The clue as to what would happen next was in Mervyn King’s intervention. Given his track record on effective banking sector regulation, there was only going to be one outcome.
Earlier this week Standard Chartered settled to the tune of $340m.
It is an enormous win for Lawsky and re-writes the rules for financial regulation in a way that will have major political ramifications in the UK.
