1:52 pm Aug. 16, 2012
Benjamin Lawksy got his first scalp on Tuesday afternoon when his Department of Financial Services announced a $340 million settlement with the British bank Standard Chartered, one week after Lawsky had threatened to revoke the bank's New York charter for allegedly transferring billions of dollars through U.S. banks, without disclosing the money's ties to Iran.
For Lawsky, a former federal prosecutor and longtime Cuomo aide, it was a coming-out party.
After years of anonymous work for two famously press-aware Democrats, Chuck Schumer and Andrew Cuomo, Lawsky was, rather suddenly, the subject of a flurry of profiles in the business press, which tried to determine exactly who he was and why he was suddenly breaking with federal regulators in Washington to launch his own action.
Lawsky has long been one of Cuomo's most trusted aides, and his involvement on any initiative, going back to Cuomo's first days as attorney general, was a sure sign that the office felt it was a priority. He was instrumental in Cuomo's pursuit of student loan lenders, and later, was the point man for negotiations with Bank of America when Cuomo's office accused the bank of fraud.
And when Cuomo combined the Insurance and Banking departments into a new Department of Financial Services shortly after his election as governor, he made Lawsky the department's first superintendent.
Lawsky earned Cuomo's respect as an effective and loyal attorney, and he is also a loyal adherent to Cuomo's public relations strategy, aggressively managing press narratives behind the scenes while taking extraordinary care never to be seen doing so. As far as the public is concerned, nothing matters except doing the people's business.
(The email signatures for Cuomo's press aides, who have a tendency to combust in the proximity of negative stories, read: "WE WORK FOR THE PEOPLE.")
Having worked for Schumer, Lawsky understood the press as well as anyone in Cuomo's office, and, when necessary, took an active role in pushing the Cuomo narrative. If the office was particularly concerned about how a story might come out, the reporter could expect an inquiring phone call from Lawsky.
The Standard Chartered case was a model of the Cuomo technique, and it achieved a Cuomoesque result: stories were accompanied by serious-looking photos of Lawsky in his office, but had no live quotes from him and minimal on-the-record input from the department's spokesman.
Most of the talking was done in Lawsky's strongly-worded order, which accused Standard Chartered of "deceptive and fraudulent misconduct," and labeled it a "rogue" bank.
When federal regulators accused Lawsky of grandstanding, the defense was mostly left to his allies: Cuomo's former top aide, Steve Cohen, praised Lawsky's action, as did an old friend and former Southern District colleague, Neil Barofsky, who later served as the inspector general for TARP.
A weekend Bloomberg profile began with an anecdote about Lawsky "insisting on his own brand of justice at a charity carnival game," where some of the toy guns were functioning better than others. "Rather than take the easy path of placing his child at the sure-fire rifle," the story said, "Lawsky pointed out the imbalance to the game’s operator, who fixed it."
The story said Lawsky's office "declined to comment or cooperate for this article."
On Tuesday, when Standard Chartered agreed to settle for $340 million, reportedly because the bad press wasn't worth dragging the matter out, the DFS statement announcing the settlement was predictably brief, even as it signaled a big win for Lawsky, in a high-stakes gamble that put his reputation as a regulator on the line.
The crowing was left to others.
Some critics grumbled to the New York Times that Lawsky's high-profile action was an attempt to set himself up to succeed Cuomo, a prospect that seems highly unlikely to many people I've spoken to who have worked with him, who consider him to be more temperamentally suited to be a prosecutor or regulator than a retail politician.
But it does set Lawsky up to act as a kind of alternate attorney general, continuing a turf war with the actual attorney general, Eric Schneiderman, that began as soon as Cuomo left the office.
The original legislation creating the Department of Financial Services would have transferred some of the attorney general's power to Lawsky's new department. ("A naked and highly suspicious power grab," according to one Yale Law professor.) That language was eventually removed from the bill, but even before Standard Chartered swelled his public profile, the Times said "one could be forgiven" for thinking Lawsky was the A.G.
Last week a complimentary story in the New York Post essentially stated the P.R. premise, telling Schneiderman to "move over" and make room for Lawksy, "the new badge in town."
The story said Lawsky is "an avid long-distance runner" and "has been viewed as a sharp legal mind running down ambitious pursuits."
Schneiderman's office told the Post it was happy to have another active regulator on the scene; there were no quotes from Lawsky or D.F.S.
A spokesman for Lawsky declined to comment for this article, too.
UPDATE: This article has been changed from the original version, which contained a line suggesting that Lawsky or sources close to him cooperated with the Bloomberg story.