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New York’s new bull on Wall Street

Charles Lane
Maria T. Vullo, superintendent of the New York State Department of Financial Services

At first impression Maria Vullo is guarded, and a bit camera shy. But when she talks about her legal work, going back decades, you can feel her conviction.

“When I went after a domestic terrorist in the Planned Parenthood case, no one would say I wasn’t tough,” Vullo said.

Vullo is the newly appointed superintendent of New York’s Department of Financial Services, an agency ahead of its peers in punishing wayward banks. 

The state has issued billions in fines, which has paid for things like programs to combat zombie homes and rebuilding the Tappan Zee Bridge. The department also took the lead to break up money laundering schemes that funded drug cartels and Iran’s nuclear weapons program.

In one of her first interviews since taking office, Vullo said she will keep up the state’s aggressive posture.

“There’s a right and a wrong. And if there’s a wrong, I will go to the end to rectify that wrong,” said Vullo.

Before coming to DFS, Vullo switched between the attorney general’s office and corporate litigation at Paul Weiss. She did this while taking on marathon pro bono cases that defended abortion doctors threatened with violence. She also sued Bosnian war criminals on behalf of rape victims.

In the often staid realm of financial regulation, seeing the world as either right or wrong is new. Most laws broken by banks are concluded with jargon-y consent agreements capped by fines and quickly forgotten. The founding head of DFS, Benjamin Lawsky, started to shift this by racking up unprecedented fines, forcing the termination of executives and threatening to close down banks. Vullo says she will do the same.

“A few bad actors could actually destroy the whole industry. You have to go after the bad actors.”

So far, Vullo has focused most of her attention on health insurance products, but she’s now starting to target banks. Recently, Vullo used the state’s new anti-money laundering rules to issue the first tax evasion fines revealed by the Panama Papers. She also released new rules that require bank executives to take personal responsibility if the company’s cybersecurity is lacking.

Some banks have raised concern about having a state regulate international banks, but others praise New York’s aggressiveness.

“You want both an active regulator at the state level, but one who is also working in a complementary fashion with federal regulators,” said Aaron Klein, a fellow at the Brookings Institution and former deputy at the U.S. Treasury.

Vullo said she’s open to working with others, but it’s not necessary.

“New York should lead. I think DFS should lead. The cybersecurity regulations we just came out with is a good example. Here is a real problem everybody recognizes. We don’t need to keep talking about it. We should try to do something about it,” Vullo said.

But after eight months on the job, Vullo is still getting used to being the agency’s public face. It wasn’t until after our recorded interview that Vullo relaxed. She leaned back, put her hands behind her head, and talked at ease about the Mets, bank culture and politics.

However, this is something that worries Anat Admati, a banking scholar at Stanford University. She said these days, showmanship and publicity are important. Admati wants to see Vullo become the regulatory star that her predecessor was.

“The public needs to be more aware of these problems. In financial regulation it’s easier for things to get lost. So if the public doesn’t pay attention, then these things will happen more frequently,” Admati said.

Admati also criticizes Vullo’s salary as much too low. Vullo went from making over $3 million a year to  $127,000 a year. DFS has brought in billions of dollars in fines, and Admati wants more of that money to stay with regulators so they can keep up with the banks.