Drew Breakspear knows what it's like to sit across the table from regulators. The veteran banker now oversees the state's financial-services industry as its chief regulator.
When state financial regulators got a tip in April about problems with two money transfer firms in Florida, it took them just 36 hours to shut down their 23 locations.
Drew Breakspear, the commissioner of the Florida Office of Financial Regulation, says he intends this kind of speed and efficiency to be the hallmark of his administration. He became commissioner in November.
On a recent visit to Fort Myers, the state's chief financial regulator addressed a wide range of issues from the health of Florida's banks to exposing fraudulent financial operators.
Breakspear, who was born in Australia and educated in South Africa, earned an M.B.A. from Harvard University in 1969 and spent decades in banking. Before retiring to Naples in 2009, Breakspear was executive vice president and general auditor at bank giant State Street Corp.
“I sat on the other side of the table from regulators for nearly 30 years,” says Breakspear. He chuckles when recounting how a friend called him shortly after his appointment, telling him: “I see you've joined the dark side.”
But Breakspear says his experience gives him a better understanding of the challenges bankers face, especially with the cascade of regulations that flooded the industry after the recent financial crisis. “I lived Basel I and II,” he says, referring to the gatherings of central bankers to establish more stringent bank-capital requirements.
Higher capital requirements can strangle smaller community banks. “For a small bank, it's a killer,” Breakspear acknowledges.
Breakspear says he can help Florida's banks speak with federal regulators because of his close working relationship with them. “I can be another voice,” he says. “I realize how important it is to have a discussion.”
Breakspear says he's encouraged Florida bankers to come to him with ideas for improving the regulatory climate. “We need smart, efficient and effective regulation,” he says.
Bank closings have slowed because Florida bank profits have improved. “We are seeing an improvement across Florida,” he says. “We don't want to close banks.”
It's been years since anyone has started a new bank from scratch in Florida. “We'd like to see some de novos come in,” Breakspear says, though he acknowledges it might be some time before one is filed. “People are still rebuilding their capital levels,” he says.
For now, Breakspear says he's focused on creating an efficient organization despite a 13% budget cut one year ago. For example, brokerage licenses that used to take 14 days to obtain in 2011 now take less than five days.
Investigations won't be permitted to drag on; they'll either be prosecuted or dropped, says Breakspear. A year ago, just 41% of the cases were being prosecuted, and today it's closer 70%. “It's an absolute focus,” Breakspear says.
States now have more investment advisers to scrutinize since the federal Securities and Exchange Commission now only regulates those with $100 million in assets or more. Previously, the federal threshold was $25 million. Breakspear says that means his office now oversees an additional 400 advisers, and he plans to review them at five-year intervals instead of 10 years previously, without hiring additional staff.
In a bid to save taxpayer money, Breakspear initiated a program so employees can work remotely and save the agency $500,000 a year on office space. In addition, the department recently renegotiated a computer contract saving the agency nearly $4 million over four years. Meanwhile, the staff will have all new computer equipment by July 1, replacing machines that were 8 to 10 years old.
Breakspear is also implementing a risk-management program that he hopes will identify fraud trends before they grow into major problems. For example, his office has seen a recent increase in health insurance check and tax refund frauds. “It'll take us a year to get it up and running,” he says.