New York Gov. Eliot Spitzer signed an executive order today naming State Insurance Superintendent Eric Dinallo to chair a newly created commission to identify ways New York can “retain and enhance” its world financial capital status.

“The financial world has changed, and we must change with it to retain ourleadership position,” Governor Spitzer said in a statement.

He said the panel will help thestate bring its regulatory structure into the 21st Century, “encouraging the use of cutting-edge technology and techniques to provide capital, insurance and other services to companies and individuals around the country and the globe.”

The New York State Commission to Modernize the Regulation of FinancialServices, which will include representatives from industry, consumer groups and government, will review all current financial services statutes, regulations, rules and policies, and propose legislative and other necessary changes.

The commission is charged with making recommendations for administrative and legal reform by June 30, 2008.

Mr. Dinallo said: “Current laws and regulations in New York do not work forthe industry or the consumer. Financial services companies claim that theyface unnecessary regulatory hurdles in bringing new products to market.Consumer advocates claim that public awareness about the risks and costs ofwhat are fundamentally the same financial products can vary depending upon the state agency that is doing the regulating.”

He said the state must develop new laws and regulations that “promote competition and the growth of business whileeffectively protecting both consumers and honest businesses from unfair orunethical practices.”

Four separate New York state agencies–the Insurance Department, the BankingDepartment, the Department of State and the Attorney General's Office–all regulate the financial services industry.

The governor's announcement noted that this regime of state regulation was created at a time when federal laws (such as the now repealed Glass-Steagall Act) restricted the commercial activities of financial services firms, financial markets were fragmented and largely national rather than global in scope, and the activities of banks, insurancecompanies and securities firms were clearly distinguishable.

The commission will be charged with identifying ways in which regulatorypowers could be integrated, rationalized and changed in order to promote economic innovation and protect the consumer.

The commission will have members appointed by the governor, including: the superintendent of banks, the secretary of state, the chairperson of theConsumer Protection Board and the attorney general; the chairs of theAssembly and Senate Banking and Insurance Committees; and additionalmembers appointed by the governor, including representatives of theinsurance, banking and securities industries, other business leaders and consumer groups.

Insurance industry members of the commission will include Herbert M. Allison Jr., chairman, president and chief executive officer, TIAA-CREF; Christopher M. Condron, chairman and CEO, AXA Equitable; C. Robert Henrikson, chairman president and CEO, MetLife; and Martin J. Sullivan, CEO, American International Group.

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Dinallo To Head NY Finance Capital Study

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