Member Spotlight

WHF is pleased to feature the WHF Member Spotlight. Each month we will feature a new WHF member.

Name: Lawrence Kaplan

This interview was conducted by Courtney Vaughan, Secretary, WHF Board of Directors. 

Membership Contribution: I am currently the Chair of bank regulatory practice at Paul Hastings LLP. I am a member of WHF Board of Directors and the Vice-Chair of the WHF Membership Committee.  I served as Chair of WHF Mentorship sub-Committee during its formative year, 2016, and helped to resurrect the mentorship program.  I have been instrumental in hosting a number of WHF mentoring events at Paul Hastings as an in-kind partner contribution to WHF.  I enjoy assisting with planning mentorship events for WHF Young Professionals and have recruited young lawyers from Paul Hastings and other firms to join the WHF membership.  I also serve on the WHF Programming Committee and am leading the track on the upcoming WHF General Counsel Forum, which is one of WHF’s annual highlights.

Hobby: I enjoy biking, and on weekends can be found on many of the DC area’s biking trails, through Rock Creek Park, or down to Mt. Vernon.

Hometown: I grew up in Bridgewater, New Jersey – basically the center of the state, just north of Princeton.

How long have you been a member of WHF and has the organization benefited you?

I have been a member of WHF for more than 25 years.  I joined WHF when I was still with the Federal government and I recall that, in those days, it was a WHF membership requirement that two members sponsor me.  WHF is a great organization that provides access to decision makers in a small-group environment as well as a great variety of programming and leadership opportunities. These opportunities develop better professional capabilities. I enjoy working on WHF Board and Committees.  Currently, I am the only male on the WHF Board of Directors; this has helped break down some stereotypes by providing a different view point, something women seek when joining male-oriented boards of directors. In the United States where women are 50% of our workforce, we all have the obligation to help to ensure each gender has equal access. At WHF, the environment is non-threatening, and it provides people with genuine opportunity to learn from good people.  It also provides access to some very great speakers. 

Walk me through your journey in the financial services industry and how your career has evolved to your current position with Paul Hastings?

Over a span of more than 30 years, I have worked on many banking issues both in the government and the private sector.  I started my legal career in the financial services industry during the summer of 1985 working with the Federal Home Loan Bank Board (FHLBB), as a summer law clerk.  I worked initially in the corporate and securities division pursing my dream of mergers and acquisitions, albeit with a lot of failing banks.  The FHLBB became the Office of Thrift Supervision as a result of the restructuring of the agency in the Financial Reform Recovery and Enforcement Act of 1989 – a law designed to prevent a future financial crises.  In 1994, I left the US Government and entered private practice with Hogan and Hartson.  My first assignment at Hogan involved obtaining regulatory approval for the first internet-only bank – Security First Network Bank – in an era of dial up and before the internet browser.  Now, 25 years later, everyone has access to a bank in their pocket. I then went to work at Sidley & Austin, another law firm.  While at Sidley, I helped to create PayPal, through its predecessor  One night I was waiting to hear if we had won a pitch for another client (we did), when my phone rang and a gentleman with a South African accent introduced himself as Elon Musk. He related that one of his directors, who was on the board of one of our firm’s client, suggested calling me about setting up a payment system to move payments in the nascent internet-auction field. was partnering with a national bank, while a competitor named PayPal across the street in Palo Alto was not using a bank.  After several months of competing the two companies merged, using the PayPal name and the software.  At the same time I worked on setting up the first Internet credit card bank, which was one of the few banking failures in the early 2000s, giving me insight to bank failures from a private sector perspective.

I was recruited nine years later to the bank regulatory practice for Nelson, Mullins,  a South Carolina firm, and then started at Paul Hastings in 2008.  The firm didn’t have a banking practice at that time but recognized that they needed regulatory professionals since they had a large portfolio of banking clients, including Bear Stearns (which was tumultuously acquired one month after I started). For the next few years, I worked on a variety of deals, especially during the financial crisis.  In 2010, I worked both on the largest failed bank, as well as the largest healthy deal.

Engaging in these matters and going through the process with clients can provide one with tremendous and invaluable experience in this industry, especially dealing with the regulators.  I was one of the few persons who had the experience of being a regulator during the 1980’s crises and then dealing with failing banks and their complex issues, in the next (and bigger) crisis.

As Chair of Bank Regulatory Practice at Paul Hastings, what are you currently working on? I am working on a variety of new potential charters, primarily involving fintech companies as well as new product issues and offerings, including in the cryptocurrency and blockchain space. I am counseling clients and dealing with the regulators on these emerging products and services. Since the advent of internet banking, provision of financial services has gotten faster and easier, giving people access to more bank services. We are dealing with personal financial companies who are democratizing financial services.  I have seen the emergence of many new companies in the financial services industry, helped to pioneer some of the changes, and have seen how things have evolved in the industry over the last two and one-half decades.  I draw from these experiences as I work on the variety of emerging products and services.

Share your perspectives about Dodd Frank and the concerns today? 

The 2008 Financial Crisis was different from the savings and loan crisis in the 1980s. It was much larger and quite different and the response by government was handled differently.  When I came to Paul Hastings, I worked with many different programs for clients such as the Troubled Asset Relief Program (TARP).  Unfortunately, when enacted, Dodd Frank legislatively restricted many of the crisis-response programs, in some ways hamstringing regulators for the next crisis.  While Dodd Frank was a major reform, it also needs to be viewed as an overreaction to a lot of things.  While the crisis had significant negative impact on a lot of people, the response was very broad – not quite a bazooka for a gnat -- but in some instances a significant over-reaction.  In response to a crisis, we’ve seen stricter regulation, and then a pendulum swing to adjust the rules. We’re also seeing now, the reform bill loosening some of the reforms implemented by the Dodd-Frank Act.  As I recently wrote to our clients, rumors of Dodd Frank’s death are greatly exaggerated.  The changes, which for the most part address things that we’ve learned since 2008, keep in place most of the Dodd-Frank framework but reduce burdens on banks that are not involved in the regulated activity – such as investments under the Volcker Rule.  I believe that all legislation and regulation should be periodically reviewed because, when implemented, they may not necessarily work.  Case in point, and something I spend an incredible amount of time on is the Volcker Rule. The Volcker Rule does not address any of the causes of the crisis, but required that all banking entities spend a lot of time proving that they are not violating it.  It is true that banks couldn’t do a lot of what they did before the crisis while Paul Volcker was the Fed’s Chairman. At the same time, the investments that they were making were not necessarily investing insured deposits in speculative investments.

Getting back to the issue of provision of financial services, the OCC Fintech Charter, and how to work with disruptive technologies and companies that are really trying to change the system, what have you observed in regard to bank limitations? Address whether bank legacy systems and bank relationships with fintech companies are really solid.  In a jointly-shared asset situation, for example, who is at risk if the relationship should dissolve?  

Banks have challenges to provide innovative products due to their legacy computer systems, which in some cases are held together by essentially electronic band aids;  fintech companies have innovative ideas, but not the necessary know-how or appreciation for understanding how regulation works.  In some ways banks and fintech relationships are frenemies with benefits.   Banks simply can’t just do what fintechs do because legacy bank technology is so frail and fintechs need access to the payment systems.  Banks need a fintech strategy to remain relevant, especially to the millennial and younger customers who expect instant and 24/7 access.  Such demographic shift is a driving force in the decision making today.  So, at the end of the day, banks have to accept frenemies with benefits relationship with fintech companies.  They need each other. It is a misstep to believe that fintechs will replace banks or that banks will vanquish fintechs.  They are going to complement each other. Banks and fintechs will need solid relationships but will face challenges when they fall out of love, as disengagement will hurt customers.   Over the next few years we’ll see this issue arise over and over again – fintechs seeking different banking partners and banks deciding they don’t like a particular fintech partner.  Challenges will arise under the Bank Merger Act, which stipulates that one bank can’t move funds to another bank without regulatory approval.  Regulatory approval typically doesn’t occur on a fintech’s timeframe, which is a challenge to manage their expectations. While focusing on the consumer, change is necessary to address what will become a very common challenge in bank-fintech relationships.

How do you make the best use of your day? 

I always start my day watching Squawk Box on CNBC and reviewing the Wall Street Journal  and American Banker to see what clients are seeing and thinking about.

What do you like most about what you do?

I like the variety – I can be working with a new product, a new bank, a merger, guiding a client around a regulatory issue – the day goes by very fast.

What inspires you? 

I am inspired by so many people with a great idea – I have a client who always says one more thing – and that one more thing can floor me with its new perspective on an old way to do something.

What is the best advice you have ever received? 
The best advice I have ever received is to sleep on it or the 24-hour rule– in the fog of war, dealing with an issue you can lose perspective – also don’t use the respond all feature on email.

What do you look up to the most and why?

I look up to clients who are always trying to make the better mousetrap – making that mouse-trap fit within the current rules and regulations is my challenge, but that is what makes the day go by faster.

April 2018 - Dina Ellis Rochkind, Of Counsel, Paul Hastings LLP

March 2018 - Marti Tirinnanzi, President and CEO, Financial Standards, Inc.

February 2018 - Janis Smith, Board of Governors, National Housing Conference

November 2017 - Mary Pat Denney, Managing Director, Risk Initiative Vertical, The Oakleaf Group

September 2017 - Joanna Girardin Shapiro, Managing Director, Global Client Management, Bank of New York Mellon

July 2017 - Mary Martha Fortney, President, The Fortney Group

June 2017 - Kris Kully, Partner, Mayer Brown

May 2017 - Lee Ann Hoover, Financial Services Advisory and Compliance, Navigant Inc.

April 2017 - Faith Arnold Schwartz, Chairman, HLP, Principal, HFSS, LLC, Advisor to Accenture Credit Services

March 2017 - Debbie Matz, Board Member, Mutual of Omaha Bank; Advisory Board OpenDoor Trading LLP