New York State's superintendent of insurance since April, Neil D. Levin, has been watching financial institutions from a number of vantage points for 16 years.

After completing law school at Hofstra University in 1981, he was a legislative aide to Sen. Alfonse M. D'Amato, R-N.Y., handling banking and securities issues. Later he was chief counsel to the Senate Banking Committee's securities subcommittee.

In 1985 he joined Goldman, Sachs & Co. as an investment banker in the firm's financial institutions group. He became New York's superintendent of banks in 1995 and held that position until moving to the insurance department.

American Banker recently asked Mr. Levin to share his thoughts on the blurring of lines between financial services sectors.

Convergence in financial services is a big topic, as Travelers' deal for Salomon Brothers shows. How do you view this trend?

My belief is it will be good for the consumer. Also, there are some things in life you can't stop. If you look at what's going on overseas with universal banking, which has been around for a very long time, these cross- industry affiliations are already in place.

The only questions we should have are these: Are we going to allow U.S.- based entities to be world-class competitors? Or do they wind up being subsidiaries of foreign entities?

I don't have a problem with anybody being in anybody else's business. But what I want to make sure is no particular industry segment is disadvantaged, and I want to make certain that whatever convergence occurs is done safely and soundly.

Financial services companies have made clear their interest in each other's business. Where does government fit in?

There are several different approaches to deregulation floating around in Washington, one of which is Sen. D'Amato's Financial Services Institution Holding Company Act, which allows different financial entities to be in the same holding company.

There are several ways to skin this cat. But we need to move forward on reform. Because what we wind up with are the U.S. institutions being disadvantaged because they are forced to do things in an efficient way.

For example?

The way state and federal law stands right now, a life company and a property/casualty company cannot own a bank. What we are seeing now is we are forcing insurance companies to get thrift charters because they can become unitary thrift holding companies.

Is there a danger in convergence of creating institutions that are too big to be fail?

We're a long way off from that. At this point we should work toward trying to achieve efficiencies which can ultimately benefit consumers. By having diversification, making it easier for consumers to get their financial services in one place, we can certainly address those issues down the road.

Your immediate responsibility is supervision. What ideas do you bring from the New York State Banking Department to the Insurance Department?

One thing we're looking at is the statutory requirement that each institution has to be examined every three to five years. I think that's too long. We need to find a way to do an annual exam, but a targeted risk- based exam.

The banking industry looks well capitalized today. How about the insurance industry?

We've seen more stability for the last few years, but property/casualty has been rocked by Hurricane Andrew, Iniki, and the California earthquake.

We need to take a hard look at making certain there is adequate capacity in the property/casualty market and that it is affordable.

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