BNY Mellon hires official who headed IRS during tea party targeting
Bank of New York Mellon hired a former Internal Revenue Service commissioner who modernized the agency's infrastructure but later was the subject of criticism from congressional Republicans over his handling of what they believed was a conspiracy targeting conservative groups.
Douglas Shulman, 47, was appointed senior executive vice president and global head of Client Service Delivery at BNY Mellon and joined the firm's executive committee, the bank said Wednesday.
He will oversee more than 18,500 employees at the world's largest custody bank, BNY Mellon said. He brings experience using technology to manage immense amounts of financial data, most notably in his previous job as commissioner of the IRS from 2008 to 2012.
His hiring at BNY Mellon underscores the emphasis the bank is giving technology as it seeks to become more efficient and deal with regulatory pressures.
“We are transforming our company through this continuous improvement approach to managing our business,” said Brian Shea, CEO of BNY Mellon Investment Services, who will oversee Shulman's group. “Doug has extensive experience leading strategic transformative change in large, highly regulated, complex service delivery and technology organizations.”
Shulman has been credited with modernizing the IRS, an agency of 100,000 employees, by updating its computer systems and streamlining the work flow to process tax returns more quickly. BNY Mellon has invested heavily in technology to become more efficient, a top priority at the bank as it faces pressure from Wall Street to cut costs.
BNY Mellon spent $460 million on software through the first nine months of 2014 and in November opened its fourth “innovation center,” in which employees figure out how to use emerging technologies to improve business.
“Investing in technology (and thereby reducing staff expenses) is clearly the way forward in this business,” said Erin Davis, senior analyst of global banks with Morningstar, an investment research company. “It's a very scale-driven, automated business to begin with, plus there are ever-rising regulatory expectations to deal with.”
Shulman's time at the IRS has been the subject of political controversy. The agency under his watch was accused of targeting conservative groups seeking a tax exemption. Starting in 2010, an IRS unit picked certain organizations for intensive scrutiny based on their politics, particularly those identifying with so-called Tea Party conservatives, according to a May 2013 report from the Treasury Inspector General for Tax Administration.
Shulman, who was appointed by President George W. Bush in 2008, told Congress before the report was released that there was no targeting happening. Once the general inspector's report emerged, he faced skeptical Republicans on the Senate Finance Committee who said he should have known about the practice and moved to shut it down.
Shulman said he was “dismayed” by the report's conclusions, but he admitted no wrongdoing on his part.
“I certainly am not personally responsible for creating a list that had inappropriate criteria on it,” Shulman told the committee, adding “With that said, this happened on my watch. And I very much regret that it happened on my watch.”
Shulman was a good IRS commissioner who was “overtaken by events” with the Tea Party scandal, said Robert Goulder, tax policy counsel at Tax Analysts, which provides analysis and information for tax professionals. Moving information on 140 million taxpayers is not an easy task, Goulder said, and Shulman managed its resources well.
“I think the IRS is a better agency because of what he accomplished,” Goulder said.
Before coming to the IRS, Shulman worked at the Financial Industry Regulatory Authority, most recently as vice chairman. He has been involved with several start-up organizations.
“I am excited to join an industry leader like BNY Mellon to oversee innovative and transformative efforts that will deliver long-term value to our clients and shareholders,” Shulman said in a written statement from BNY Mellon. “I look forward to working with the rest of the team to drive innovation and relentless focus on continuous process improvement.”
Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or firstname.lastname@example.org.