However, “we have heard from a few federals expressing interest” in possibly making a change, said Michael Lanotte, senior vice president and general counsel, citing conditions impacting federal supervision under the NCUA.

Lanotte explained that the Cuomo policy encouraging conversion is contained in a new October restructuring law which combines the banking and insurance departments. The governor had pursued the agency merger as an efficiency move but also a fallout of the 2008-2009 financial crisis and “the gaps in our system of financial regulation.”

“Certain segments of the financial markets fell into these gaps with disastrous results,” Lawsky told a Dec. 1 House panel hearing on consolidation progress.

To help close those gaps “and ensure a renewed vigilance to prevent future systemic risk,” the merger was advanced “with a broad view of the entire range of financial services,” Lawsky said.

Lanotte said the trade group is currently awaiting final appointment by Lawsky of the top banking deputy in the department who would oversee CUs and banks.

In his testimony, Lawsky noted that the newly created agency now supervises “nearly 1,700 insurance companies with assets exceeding $4 trillion, nearly 300 state-chartered banks with assets of $2.1 trillion and more than 1,600 licensed financial entities including mortgage loan originators.”