Elizabeth McCaul has resigned as the New York State Banking Superintendent effective today, capping an eight-year stint at the department and six years at its helm.
In a letter to Governor George Pataki, Ms. McCaul, 41, cited a "variety of personal reasons" for her departure, but several observers said the abrupt resignation had caught them by surprise. She recently gave birth to her seventh child and in an interview Thursday said she wanted a break before taking on another challenge. "I have to see what opportunities become available," Ms. McCaul said.
The department has already started looking for a successor. That person is expected to be named as early as next week. Ms. McCaul's second in command is First Deputy Superintendent Daniel A. Muccia, a 29-year Banking Department veteran.
During her tenure, Ms. McCaul crusaded against predatory lending, led the fight to get nearly $1 billion of restitution for Holocaust survivors, and worked to promote the benefits of the state's banking charter. Her office regulates 3,500 financial institutions, including many of the biggest - HSBC Holdings PLC, J.P. Morgan Chase & Co., and Bank of New York Co. - and foreign institutions with offices in the state.
The last three years in particular have been a busy time for regulators. "Bank supervisors have had to have the ability to really understand what is going on inside the banks," William McDonough, the president of the Federal Reserve Bank of New York, said in an interview. "We've had very good partners in that regard."
"There is a lot of very well-deserved respect for what she has done" for banking, said Rodgin Cohen, the chairman of the New York law firm Sullivan & Cromwell and a prominent banking attorney. "And it's not a case where she has done everything banks have wanted her to do."
"I'm disappointed in a regulatory sense," said Charles Prince, head of Citigroup's global corporate and investment bank. "She's tough but open - the best characteristics of a regulator."
Two years ago the department issued an enforcement letter against Citigroup Inc. that forced it to meet minimum requirements for lending in low-income communities, waive $1 million of fees for low-income borrowers, and open loan offices in minority communities.
Last year, Ms. McCaul led multi-state negotiations with Household International, a subprime lender accused of predatory tactics. Household settled for $484 million.
But also last year the Banking Department reportedly angered Gov. Pataki by helping to draft a terror contingency plan for New York City's financial institutions. One of the proposals in the draft - which was submitted by the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission - advised major banks and securities firms to move its backup sites 200 to 300 miles out of the city. The proposal was decried for threatening New York's employment base.
Ms. McCaul recused herself earlier this month when the department deliberated HSBC's proposal to buy Household. Her husband is a managing director of Goldman Sachs & Co., the investment bank that advised Household on the deal.
On Thursday, a spokeswoman for Gov. Pataki said, "We appreciate Elizabeth McCaul's years of service to the people of New York State, and we wish her the very best in her future endeavors."
Ms. McCaul joined the department in 1995 as the first deputy superintendent after 10 years as an energy and project finance banker at Goldman, Sachs. She was a close lieutenant of then-Superintendent Neil Levin and became the department's acting head in 1997, when Mr. Levin left to become the state's superintendent of insurance.
At the time observers expected the two departments to merge, but that never happened. Mr. Levin left the insurance department to become the executive director of the Port Authority of New York and New Jersey. He died in the Sept. 11 attack on the World Trade Center.
Ms. McCaul spent three years as the acting superintendent before finally being nominated by Gov. Pataki for the permanent slot. The state Senate confirmed the nomination in 2000.
