Photos: Michael Pieciak during his interview with Joyce Marcel in Brattleboro. Photos: Randy T. Holhut
by Joyce Marcel, Vermont Business Magazine It's hard to find anyone who has a bad word to say about Michael S Pieciak, the high-profile former commissioner of the state's Department. of Financial Regulation and the man who took the leading and highly visible role of Governor Phil Scott's "data guy" during the state's successful two-year battle against COVID.
Pieciak resigned as commissioner on April 30, saying he wanted to explore other options. Then on May 4, State Treasurer Beth Pearce announced she would not be seeking another term because of health reasons.
So Pieciak caught his breath, turned around and, on May 6, announced he was running for Vermont state treasurer to replace Pearce — with Pearce's endorsement. If it looks like collusion, that's because, in the nicest way, it is.
Ordinarily, this magazine stays out of electoral politics. We don't, as a rule, profile people who are running for office because a profile might look like an endorsement.
But we had already begun an “exit interview” piece on Pieciak when he left and then so-quickly re-entered public life. So we continued with this profile, but as I say, it only looks like a puff piece because it was impossible to find someone with a negative word to say about him.
Good humored, husky and ruddy of face, Pieciak is the son of an influential accountant father and a philanthropy-minded mother.
He grew up in Brattleboro, played football in high school — and still looks the part.
He took his BA in political science cum laude from Union College in Schenectady, NY, and got his law degree summa cum laude from the University of Miami School of Law, graduating in the top 2.6 percent of his class.
He's been president of the North American Securities Administrators Association in Washington, DC. His resume is five pages long, and he's only 38 years old.
Pieciak worked as an attorney in New York and Vermont. He ran a successful primary campaign for Vermont Attorney General William Sorrell. He spent the last eight years at the Department of Financial Regulation, the consumer watchdog for Vermonters' finances. He was appointed by a Democrat, Governor Peter Shumlin, and spent two years as a deputy commissioner of securities before Shumlin appointed him commissioner. He continued under Scott, Shumlin's Republican successor.
The usually imperturbable Scott almost gushes when he talks about Pieciak. Scott came into office with a managerial policy that worked well with Pieciak's style.
“When I first came to office,” Scott told me by email, “I sat my Cabinet down and said we’d be successful as a team when we break down the silos of our agencies and departments and begin working together to solve, not only our own agencies problems, but those of our teammates as well. Commissioner Pieciak’s role in helping lead Vermont’s nation-leading response to the pandemic is a perfect example of that success.”
Photo: Michael Pieciak during his interview with Joyce Marcel. Photo: Randy T. Holhut
When the state first encountered COVID and was organizing its response, Scott was one of the rare governors who understood that science, modeling and data were essential for charting a successful course through the disease.
“I realized putting the commissioner of financial regulation in charge of this wouldn’t necessarily be the first choice for most, but I knew Mike was the person, who had the necessary skillset and talent to do the job and do it well,” Scott continued. “From my standpoint, he’s exceeded my expectations, and the information he’s provided, in the hundreds of briefings over the last two years has helped guide many of the tough decisions we’ve made.”
Pieciak, along with Scott, Health Commissioner Mark Levine and Human Services Secretary Mike Smith, went on television three times a week to present their findings for Vermont, the Northeast and the nation (with Quebec mixed in for good measure).
Drawing upon DFR's data-tracking expertise, Pieciak was perhaps the most qualified official in the state to make recommendations around the timing of reopening the state.
He analyzed how many people were in a hospital, how many were in intensive care, how much hospital capacity was being used and if there was still enough. (The state never got close to maxing out.)
He tracked the vaccine rollout, forecasted trends and broke down the data by age group.
Pieciak also tracked traveling data. Probably the most closely watched thing during the first summer of the pandemic was his color-coded travel map, which illustrated which places in the Northeast were safe to visit and which were COVID-ridden.
The state used his data to decide when to open up the travel and tourism industry and allow stores, public buildings and businesses to reopen.
Thanks to Scott's decision to focus on data and science, Vermont had the fewest COVID cases per capita, the lowest number of deaths and one of the highest rates of vaccination in the country.
In September 2020, Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said at one of Scott's press conferences, “I was sitting here listening to the numbers that [Governor Scott] said, and I would wonder if I could bottle that and take that with me when I go around talking to other parts of the country.”
Addressing the impact of Vermont’s population density on its case trends, Fauci said, “It’s not a question of density or not, it’s a question of what you did or did not do correctly and, from the numbers that I’ve seen, Vermont has done it correctly.”
In general, Scott is full of praise for Pieciak's governmental service.
“Beyond the pandemic, Mike’s record speaks for itself,” Scott said. “He’s strengthened the department, been an effective manager, and a strong advocate for consumers and economic development. I know that whenever Commissioner Pieciak is involved in a situation, I have complete faith, it will go well. Throughout his career, he’s been an indispensable public servant to the people of Vermont.”
Levine also has nothing but the highest praise for Pieciak.
"We developed one of the best working relationships in state government due to our roles in the pandemic,” Levine said in an email. “He's gracious, genuinely warm and positive, sincere, trustworthy, and a true pleasure to work with. He is committed to high ideals but always willing to discuss his point of view and entertain yours and potentially negotiate. He's a strong team player with an ethic of self-sacrifice to support the team. He shares my commitment — and ability — to teaching, providing clear explanation in an enthusiastic way, distilling things down to core concepts. He has great leadership skills that helped create a dedicated and reliable team.”
The head of the Vermont Chamber of Commerce, Betsy Bishop, also has high praise for Pieciak, both as head of the DFR and for his pandemic leadership. (The Chamber formed what they called the Levine/Pieciak Fan Club, complete with photo buttons.)
“The chamber works with a lot of businesses that are regulated entities,” Bishop said. “We worked with Mike around banking issues, around insurance issues, and in other areas as well. But over the last couple of years, during the pandemic, Mike Pieciak really moved to a whole different level.”
The data guy was “hugely important” to businesses over the past two years, Bishop said.
“Especially in the very early days of the pandemic, in March of 2020 and ongoing into that summer, the government shut down businesses,” Bishop said. “The impact it had on the economy, on those businesses, on the livelihoods of small-business owners and their workers, was devastating. So many businesses across the state stopped what they were doing to watch those television updates several times a week. And Mike Pieciak was really the guy who was giving us the data, the statistics on all of the different pieces. While Dr Levine was emerging as the known health expert, Mike Pieciak was emerging as the honest broker for data and was hugely helpful to the business community.”
Before the pandemic came along, Pieciak was known for his work untangling the complicated web of lies that lay at the heart of the Jay Peak EB-5 pyramid scheme; ostensibly, foreigners could invest in Vermont projects and get a green card if they created jobs here. In reality, most of their investment money seems to have been pocketed by the perpetrators, three of whom recently received prison sentences.
After the US Securities and Exchange Commission began a lawsuit over the Jay Peak fraud, Michael Goldberg was appointed Jay Peak receiver by the Florida courts. That's when he began working with Pieciak.
Photo: From left: Michael Goldberg, Governor Phil Scott and Michael Pieciak at a press conference discussing the $150 million EB-5 settlement with Raymond James in April 2017. VermontBiz photo.
“Mike was instrumental in bringing me up to speed and assisting the SEC in obtaining the injunctions,” Goldberg said. “He's extremely bright. He is trained in securities and he's a lawyer — so he has a very good background. He read through thousands and thousands of pages of banking documents and discovered the wrongful flow of money. He basically uncovered the fraud. But for his efforts, this could have gone on a lot longer and a lot more damage could have been caused.”
While serving as commissioner of the DFR, Pieciak was also appointed by the governor to a seat on the Vermont State Colleges Board of Trustees. He put in six years on the board, and Joyce Judy, president of the Community College of Vermont, said he was a dream to work with there.
“He's just a genuinely nice guy,” Judy said. “Over the time he served on the board, he was always curious and became very interested in CCV and how it operated. He took a genuine interest in the college, but also in our students and how we are helping Vermonters be successful. He shows up at CCV graduations. He's helped us celebrate our students. Showing up at graduation is a big deal, you know, for our board. It's giving up a day. But it's also a way to honor students, and they are appreciative of that.”
Some of the adjectives Judy used to describe him were “respectful,” “thoughtful” and “fair.”
“We don't always agree on things,” she said. “But I feel like he's listened. He doesn't overreact. He's willing to hear all sides. At the same time, he's willing to make decisions, but he does it in a really thoughtful way. And he also is, as we saw through the pandemic, quite comfortable at using data to help drive his decisions, which is quite refreshing. And even after he stepped down, he continued to stay in touch. This was good because he comes at it from a very broad perspective. He understands finances. He understands the complexities of a budget. We miss his voice on the board.”
Most recently, Pieciak has been deeply involved in negotiations to solve Vermont's chronically unfunded state pension system problem. After a year of hard negotiations undertaken by the Pension Task Force, which included Pieciak, the Legislature passed a compromise bill, Scott vetoed it, and both the Senate and House overrode his veto unanimously.
“I thought it was a pretty important compromise that was achieved,” Pieciak said. “And it was challenging to achieve it, because we were still in the middle of a pandemic. Teachers and state employees were asked to do so much during the pandemic, and then to say, 'Now, let's talk about reforming your pensions.' It didn't seem like you'd get to any kind of compromise, especially in an election year. But there was quite a bit of COVID money in excess revenue, and that helped fill out any sort of compromise. A true compromise was achieved.”
Fourth-grade teacher Molly Stoner of Dummerston was on the Pension Task Force.
“Mike is a man of integrity and authenticity, which is key for me,” Stoner said. “After working with him on the Pension Task Force, I trust him implicitly and know that his intentions are always aligned toward equity.
"He is a top-notch listener. Throughout the pension process, he would intently consider different perspectives and then ask poignant questions that often advanced our understanding of the positions around the table. He also has a unique ability to synthesize information, making astute connections and explaining his analysis of complex numbers with impressive clarity.”
Senator Jeanette White (D-Windham) chaired the task force; she also has high praise for Pieciak's work.
“We met every week for eight months,” White said. “The pension issue was very thorny. Mike brought a lot of knowledge to the work, but more important he listened to people and worked hard to come to meaningful decisions. He is smart, respectful, and has a good sense of warmth and humor.”
During an interview in the Brattleboro office of Pieciak's father, the well-known accountant Joseph Pieciak, Michael mentioned that his parents' home was about a block away.
“And I went to school over here at St Michael's Catholic School,” he said. “So within this one square mile, I lived the first 14 years of my life. And I loved Brattleboro. It was such a great community to grow up in. There were so many families that had community service in their DNA. There were a lot of people to look up to, and to have as good role models.”
His mother, Carolyn, was one of the founders of St Brigid's Kitchen at St Michael's Catholic Church. Now an agency of the Vermont Foodbank, it has been providing lunches and other services for the hungry and/or homeless since 1982.
“I was the youngest of three children,” Pieciak said. “So my parents were like 40 and 39 when they had me. They didn't get a babysitter for me. They would bring me to the parties with their friends. So I hung out with a lot of 50- and 60-year-olds as a 10-year-old kid, having conversations with them and such. I think it helped me a lot. By the time I was 14 or 15, I felt much more able to converse with adults than I might otherwise have felt.”
Even as a child, Pieciak was industrious. His first job was at a community pool, making sure the chemicals were balanced and the lawn was mowed. That was when he was about 12 years old. By then he was also delivering the weekly Town Crier newspaper.
“That was fun,” he said. “I also worked here at my dad's office growing up. Back when there were paper files, you had to move this year's tax files from up here down to the basement, and you had to take the ones that were from eight years ago and make sure that they got appropriately shredded so there was no confidential information disclosed. So there were those kinds of projects.”
He went to St Michael's, then a K-6 school that has since expanded to include middle - and high school-age students.
“Actually, one of the most consequential things in my young childhood, I would say, was the transition between kindergarten and first grade,” Pieciak said. “First grade started a week before kindergarten, and first grade was all day. And kindergarten was 8 in the morning to noon, half a day. So first grade started a week early, and it was a full day. I just hated it. I cried every day.
“I told my mom, 'I want to go back to kindergarten, this is terrible, I hate it.' My mom's like, 'Oh, you've got to keep going.' And finally, at the end of the week, she relented and talked to the kindergarten teacher. She said, 'He just seems so miserable in first grade.' And the teacher said, 'Well, you could have him do another year of kindergarten, he'd just be an older first grade student.'”
His mother let him do another year in kindergarten.
“That class that I went into from first to sixth grade?” Pieciak said. “It was like an all-star class of great, great students, great friends that I had for all of the time at St Michael's and beyond. I feel fortunate that I was able to get into that good place early on and be much more comfortable, and with lifelong friends as well.”
Of the many lessons learned from his parents, most important was the value of community service.
“My dad helped with the Brattleboro Country Club expansion from nine to 18 holes,” Pieciak said. “He worked tirelessly on it, and he doesn't play golf. He told me one day, 'You know, if I added up all the hours I spent on that, and I was billing them for it, it would be like $100,000 to $200,000.' There was no recognition in it for him and the other folks who did the expansion. I asked him about that one day, and he said, 'You know, this town has given me so much. I've raised my family here and grown my business. I view that work as some little piece of giving back.”
Pieciak just substitutes “Vermont” for “Brattleboro.”
“It's like the state has given me so much, it's given my family so much, whatever you can do to contribute back to it is really important,” he said. “That is probably the most valuable lesson I learned from my father.”
Spending 14 years inside of a Brattleboro mile was more than enough for Pieciak.
Like a lot of Vermont kids, he wanted to see more of the world before he settled down. He went to Brattleboro Middle School, but then moved down one state for high school, to Northfield Mount Hermon in Massachusetts, where he played football and was the team captain during his senior year.
Then he chose Union College for his BA. He played a little football there, too.
“I never had an injury until my sophomore year, when I started having this injury and that injury,” he said. “I participated in the team all four years, but my senior year I had a dislocated disc in my back, and I couldn't even play.”
I asked him why he chose law school, and I'm still not certain if he was joking or not when he said — with a straight face — that he decided to be a lawyer after seeing Joe Pesci in the film “My Cousin Vinny.”
“I so loved the Joe Pesci character, and also the prosecutor character,” Pieciak said. “Joe Pesci, you know, digging into that case, churning up those facts, presenting them in the courtroom with flair and theatrics. I was a pretty young kid when that movie came out, but it left an impression on me.”
He chose to study law at the University of Miami in Coral Gables.
“Union was two hours away, but at least I was getting some separation from Brattleboro,” Pieciak said. “Next, I wanted to go somewhere far away. I wanted to see different parts of the country. I wanted to live somewhere different. Miami sounded like a pretty nice option.”
He loved Miami.
“It's a great city,” he said. “It's a very new city. All of America is relatively new, but Miami doesn't have the history of New York or Boston. Its story was in the 20th century, like in the 1920s and 1930s.”
He enjoyed Miami's diversity.
“You go into a bakery, and nobody speaks English,” he said. “It's all Spanish, and you have to point at what you want. You hear so many different languages there. And that was a culture shock, after growing up in Vermont and spending so much time in the Northeast. I really appreciated the diversity of people, the diversity of language, the diversity of experience and the natural beauty of Miami. Also the great professors who gave me a great opportunity to learn and start my legal career.”
Pieciak served as editor in chief of the University of Miami Law Review and graduated with honors in May of 2009.
He still wasn't ready to come back to Vermont, so he was admitted to the New York Bar in February of 2010 and took a job at Skadden, Arps, Slate, Meagher & Flom, a New York law firm.
“It was an important couple of years for me,” he said. “The law firm I worked at was a reputable firm that worked for all of the biggest companies. It was clear to me that I didn't want to have a career there, but I wanted to have the experience. That group of law professionals go about providing high-level legal analysis competently and quickly. They have a motto of 'Never say no.' They figure out how to make something work for a client. They figure out what the alternatives are. Obviously, there are limits to that. But if it's something that is within the bounds of the law, and ethical and moral, then never say no. Make sure you get a resolution or find a compromise or find a path forward. And I think that was an important lesson.”
Home To Vermont
When he was about 27, Pieciak started to test the waters in Vermont. He was admitted to the Vermont Bar in April of 2011, and took a job at Downs Rachlin Martin in Burlington. It wasn't a comfortable fit.
“There was nobody else in their 20s there,” he said. “I didn't feel connected to the young professional scene in Burlington. I was missing New York, where there were over 200 associates at my old firm within a year of my age. It had a different sense of camaraderie to it.”
In January of 2012, Pieciak reached out to his old law firm and asked if he could have his job back. They said they had a new, six-week MBA program for younger associates that wouldn't start until October of that year, and they wanted him to go through it.
“I thought, 'OK, that sounds like a good program,'” Pieciak said. “But waiting until October will make for a long year. Then, out of the blue, Kate O'Connor called. She was one of Governor Howard Dean's top policy advisors. She said, 'You really should meet Bill Sorrell. He's going to have a primary campaign and he's a really good friend of Howard Dean.' And Howard Dean was my idol growing up. I thought he was such a good governor. So anything Howard did must be good. I reached out to Bill.”
Pieciak became Sorrell's primary campaign manager from April 2012 to October 2012, and he remained attached to the campaign as an advisor when he went back to New York.
“First thing I thought when I looked at the campaign was, 'Boy, it's not very organized.'” Pieciak said. “The next thing, I met Bill in person, and he was wearing a tie-dye T-shirt, and I thought, 'Boy, this guy is not going to win this race.' I kept that thought to myself. He asked me to meet him late one night and asked if I would be his co-campaign manager with somebody else. I don't know who the other person was. But I thought about it and then we were off and running. It's a great experience, getting to work with him, understanding our politics a little bit, understanding the attorney general's office, and getting to know Bill's family and his family's history. And I'm still very close to his three sisters. I feel like they're my sisters now.”
(Sorrell won his primary and the office again in 2012, and became the longest-serving attorney general in the history of Vermont, holding the position for 20 years.)
Pieciak admits that his 20s were a period of testing things out: New York, Downs Rachlin Martin, the campaign trail, New York again. Then he heard that Shumlin was looking for a deputy head of the DFR. He reached out and got the job. He remained there, first as deputy and then commissioner, from 2014 to 2022.
The Department of Financial Regulation sees itself as the Vermont consumer's watchdog.
“We’re the ones that make sure that Vermonters are being treated fairly by the banks and the insurance companies,” Pieciak said. “We watch the investment firms that are operated in our state. We make sure that Vermonters are treated fairly, and that companies are following the law. And when they're not, you know, we intervene.”
Photo: Mike Pieciak DFR commissioner Oct 2017. Courtesy photo.
Apart from the Jay Peak scandal, the DFR under Pieciak has received penalties and restitution of over $30 million for the state.
“We've returned that back to Vermonters,” Pieciak said. “That's definitely one of the things that our department takes the most pride in. And certainly I do, as well.”
The DFR's consumer services division receives thousands of phone calls a year and hundreds of complaints.
“We work those complaints,” Pieciak said. “And if all of a sudden we have three or four or five different complaints about the same issue with the same company, then we bring that to a broader market conduct examination.”
The department also has a market regulatory and solvency side.
“We make sure that our companies are strong,” he said. “We make sure they're not making risky investments or decisions. We view that as a consumer protection piece. We want to make sure that companies are going to be around to make good on the promises that they're making to Vermonters. That's a critical element.”
For example, from an insurance company based in Vermont, the DFR would want to know about its assets, revenues, liabilities and investment portfolio.
“It has to stay within the statutory regulatory structure that has been established for the safe and sound operation of an insurance company,” he said. “Then how many policies have you written? What's your underwriting process? We want to make sure that they never get to a situation where their liabilities are anywhere near the amount of the assets they have on hand. We want to make sure they're well capitalized and in a position to survive the long term.”
Companies like these file quarterly and then annual reports with the agency.
“We do examinations anywhere between every year and every year to five years for banks, credit unions, insurance companies, investment firms,” he said.
The DFR also monitors Vermont's captive insurance industry.
People are most familiar with an individual or business purchasing insurance from a third-party company like Allstate or Travelers. But Vermont is one of the founders of a different kind of insurance company, called “a captive.”
With a captive insurance company, a business itself actually forms and owns the insurance company.
By doing this, a company can better manage its unique risks and has direct access to the reinsurance marketplace to help offload some of those risks.
Forming a captive insurance company is particularly advantageous when insurance premiums are increasing — what’s referred to as a “hard market” — which has been the case for the last two years or so.
“Vermont is a good place to form a captive insurance company because we have a strong Vermont-based industry made up of lawyers, accountants, actuaries, investment advisors and captive managers who specialize in captives,” Pieciak said. “We also have a world class regulatory team at DFR which is responsive and sets a high bar. Finally, the industry has traditionally received very strong support from the Legislature and the governor, regardless of who is in office. This is a great combination that is hard for any other place to beat.”
The state was prescient in setting up this industry, and over 600 captives now operate in the state. The industry is thriving, Pieciak said.
“It's never been better,” Pieciak said. “It's the gold standard for not just the country, but for the world. We licensed 45 captives last year. And we have already licensed another 20 captives through today. And we're not even halfway through the year.”
Other states copy Vermont's captive laws and regulations.
“Another state can take our law and implement it, and they do that,” Pieciak said. “There are even some states where they forget to take out the reference to Vermont statutes sometimes in the bill, and it passes with that. But they can't replicate the industry. They can't replicate those professionals. They also can't replicate the professionals at our department, quite frankly. We are well-financed, we're well-managed, we're well-resourced and experienced.”
The Legislature and the governor support the industry.
“Without exception, we have a captive insurance bill every year that sort of either tweaks our laws or tries to do something innovative and make Vermont remain at the top of the heap,” Pieciak said. “The Legislature always prioritizes that bill. The governor always prioritizes it. I think that cooperation with our department, the Legislature and the governor is key to keeping us at the top.”
During the pandemic, Pieciak and his office worked behind the scenes with the banking industry on things like the federal Paycheck Protection Program, being a liaison between banks and the Agency of Commerce and Community Development, on land records and other issues.
Someone who has watched Pieciak in action for a long time is Chris D'Elia, president of the Vermont Bankers Association.
“I heard of Michael when he was deputy commissioner,” D'Elia said. “And certainly, I read the press related to EB-5. But I really didn't get to know Michael until he came in as commissioner. We worked closely with him and his department. Since that time, we've always had a great working relationship, built on mutual respect and a willingness to find solutions to any of the issues that were coming to light at any given time. I found him to be very, very good at his job. He's mindful of his hat as a regulator, but also wants to try and find solutions. I just have the utmost respect for him and what he was able to do with the department. Mike is always making sure that Vermonters are taken care of, especially in his regulatory role, but also making sure that he struck a balance for all of the parties involved.”
A matter of concern for many Vermonters is the disappearance of local banks. Small banks get bought up by larger banks, which get bought up by even larger banks, and even credit unions are merging and expanding. I asked Pieciak whether he thought this was a good thing — or maybe even an inevitable thing.
“On the consumer side, we look for access to financial services,” he said. “So even though there might be fewer banks, are there still branches throughout the state where people can do banking? Is there still that kind of access? Is there online banking access now, whether through one of our banks here, or through a licensee like PayPal or Venmo or some of these new wave enterprises? Can people do financial transactions and get financial services through those kinds of entities?”
On the business side, DFR wants to make sure that local decision-making can occur.
“So small businesses can get answers to their loan applications,” he said.
But he recognizes that the disappearance of small, rural, local banks can be discomforting to many Vermonters.
“The good thing about a local bank is that they know you,” he said. “They know your business acumen. They know the people who are supporting you. And they may make a decision that isn't completely financially-based. The financials might be a mixed picture, but they say, 'We trust that this person can be successful in this situation.' And you don't get that with a Chase Bank or a Citibank that would look purely at the financials. If you're a young person, if you're a person of color, if you're female entrepreneur, if the bank is looking purely at the financial, sometimes you might not get the opportunities that a community bank might offer you. I do worry about that. You do not want to lose that.”
Pieciak said that even mega-banks keep local footprints.
“For example, Chittenden Bank got bought by People's United Bank, which has now been bought by M&T Bank,” he said. “They have tried — and I think they have done it successfully — to keep a local footprint and a local focus on Vermont, even though they are a regional and now a mega-regional bank. I think many of the banks that operate here do try to do to keep that authority and focus here in Vermont.”
But Pieciak is also heartened by what he sees as a potential new movement to create new local banks.
“Something good that we haven't seen since 1989 is a new bank coming onto the scene, like the Bank of Burlington.” he said. “We just issued their conditional charter two months ago. It's got a really strong team. Jeff Hesselink is going to be the CEO. He was the former CEO of Merchants Bank. He has on his board of directors and as part of his investment team almost every significant large business owner in Burlington. So they have quite a strong team in terms of expertise and resources and finance.”
The Bank of Burlington should be a good example for other banks, Pieciak said.
“What you would really want to see in a perfect ecosystem is that some banks are merging and getting bigger, but you have newer, smaller banks starting up to fill some of the gaps that might get left behind with small business lending,” he said.
When COVID Hit
Like most of us, Pieciak was taken unaware by the magnitude of COVID when it came racing down the pike. Unlike most of us, however, he had to deal with it on television with his lead-in being “The Price Is Right.”
He took on a huge responsibility and was very careful to give Vermonters the best information he could collect.
Photo: Michael Pieciak during a press conference in August 2020. Screen grab from ORCA Media video of governor's press confernence.
“Usually, if I'm going to speak, I like to know what I'm going to say,” he said. “Generally, I'll have a note or two. And I remember the first press conference, I wanted to make sure that every single word was correct. I wanted to make sure I didn't give the impression that something wasn't working when it was working, just by using the wrong word. I didn't want to provide something that wasn't fully accurate or a misstatement or a blunder. I didn't want to say anything that would erode the trust that we needed to build and maintain. So I remember writing out every single thing I said, and practicing it and practicing and practicing and rewriting and practicing. And for the first number of weeks and months, that was the way I would do it, because I thought it was so critical that we get every word right. I did it just because of the monumental nature of the task that we were being asked to do — to communicate this information to people, to make sure they had good information to base their decisions on for themselves and their families and their community. So it was stressful.”
Also, like most of us, it took Pieciak a while to understand that we were in it for the long haul.
“It was kind of a lightbulb moment,” Pieciak said. “We were working every day at that point. We were working weekends, nights, mornings. And Dr Fauci was talking about 15 days being the slowest spread. And I remember, about day six or day seven, I sort of sat up and thought, what's going to happen on day 16? I don't think it's going to fundamentally be different on day 16 from day 15. It was the first time I'd thought about it, and I said, 'Oh, we're going to be in this for a long time. This is not a 15-day thing. It's not a two-week thing. This is, I don't know how long.”
Every day felt like a week, he said.
“We were just focusing on our day-by-day,” Pieciak said. “And that got us through the first three or four months. Then we said, 'You know, we need to have a more reasonable approach for our own physical and mental health to this. It was a sprint at the beginning, but this is going to be a marathon. But those first few months were quite intense, making sure we had enough beds, enough ventilators, enough PPE. There was always some crisis, or usually multiple crises a day that had to be dealt with.”
In spite of the intense pressure to keep Vermonters on track for dealing with COVID, Pieciak also had to keep running the DFR.
“There were two things that were going on with the other parts of my job,” he said. “In banking and insurance and the like, there was a lot of things related to COVID. Banks had to notify us when they were closing the branches, for example, or when they were not going to have their lobby open. We had to change regulations and policies so that they could comply with the governor's orders. Then, we were one of the first states to issue a directive to insurance companies that they had to pay for COVID testing and COVID-19 treatment as well.”
The DFR had to create licensing for telemedicine, so it could be more flexible and reimbursable at the same level as in-person doctor visits.
“We also had a policy around prescription drugs,” Pieciak said. “Before, you had a 30-day limit on your prescription drugs. But we didn't want people to have to go to pharmacies frequently. So they were able to get longer-term prescriptions.”
The travel maps put Pieciak under a microscope.
“In the first few months, they were a source of contention,” he said. “What places were sick? Was it safe to travel to where? Or was the level of infection low enough that people in various industries could reopen? It was pressure every way. We had pressure from people who said, 'You know, keep the travel map. We love it.' We had pressure from people saying, 'I want to go to vacation and XYZ place and the map doesn't make any sense.' We have businesses saying, 'Keep the travel map, it's keeping my business open.' Or 'Don't keep the travel map. It's hurting my business.' It ran the spectrum. But you know, at the time we were the only state to take a county by county approach. And now you look at what the what the Centers for Disease Control and Protection does, and everything they do is county by county — their risk mitigation maps and their transmission maps and whatnot.”
Vermont's approach definitely influenced the federal approach, Pieciak said.
“I think over time, for sure,” he said.” Maybe they didn't pay attention in the Trump administration. But when the Biden administration came on, how could they not look at the state that had been managing COVID the best and say, 'What are they doing that we're not doing?'”
Not long ago, the state's team had a meeting with representatives from the White House data team.
“We ran through one of our normal presentations that we delivered to the governor,” Pieciak said. “We said, 'Here's the Vermont metrics, here's cases and testing and positivity rates, here's hospital numbers. And now let's turn out to New England and look at what's going on New England, let's look at the Northeast region as well in Canada. And then let's take a broader look across the globe. And let's look at how things are in Europe in the EU and this and that.' And the White House team said, 'You know, we've been through a lot of these briefings with various states. And nobody looks at the region and nobody looks further than that.' And it's so critical to do that, because they tell us the direction that we're heading. They tell us what we're going to see in a number of weeks or a number of months. So I think all the way around, we had a good response to COVID in a way that we should be proud of.”
The person who gets the most credit for Vermont's admirable response to the COVID crisis is Scott, of course. Sometimes, Pieciak said, people are “built for the moment,” and Scott is one of them.
“Phil doesn't like the political side of public service, campaigning and fundraising and even the legislative interactions,” Pieciak said. “But having his background in terms of being a CEO and a business owner, that executive style management is something that he was much more comfortable with. So with COVID, there was no politics. There was no fundraising. The Legislature largely stepped back and said, 'Let us know what you need.' There were no end-of-the-year budget fights or trying to outmaneuver each other. It was purely executive decision-making and executive action about making sure we had the right PPE at the right hospitals and the right doctors and nurses in the right places and having all these contingency plans. Really, from a personal interest level, Scott had a background built for that.”
Also, Scott had quite a different temperament from the man who was president at the time COVID reached the United States.
“You couldn't get much more opposite from that president than Phil Scott,” Pieciak said. “Phil was so calm, cool, collected, thoughtful. And you trusted what he was saying. And the big thing he did, he allowed his team to be so present and public at the press conferences. I think it demonstrated his strength. A lot of times, politicians think they have to be the sole focal point because that will show that they know everything and they're very capable, or whatever. And yet Phil would defer to Dr Levine and send questions to Dr Levine, to (Agency of Human Services Secretary) Mike Smith and myself. And I think that showed a strength and competency that was refreshing. People really responded to that.”
It didn't help that, in the end, Pieciak also got COVID.
“Everyone's experience is different,” he said. “Fortunately, I had been boosted about a month before. I didn't even have a cough. My throat was a little scratchy one day, and then I had some congestion the next day, and that was the extent of it. The worst part about it for me was the isolation. It was right before Christmas. So my Christmas was canceled and New Year's was canceled. I was fortunate, though, that was the worst part.”
Crypto in Vermont
The cryptocurrency crash in mid-May brought to light the dangers as well as the potential profitability of digital currencies such as bitcoin.
Pieciak said that the use of crypto has exploded in Vermont.
“We regulate all the exchanges that buy and sell cryptocurrency,” Pieciak said. “They have to have a license with our department. And we get annual reports on how much has been transacted. So in 2019, there were 44,000 transactions in Vermont. That means people buying in and out of crypto or between cryptos.”
The total volume of those 2019 transactions was $15 million.
“In 2020, the number of transactions in and out of cryptocurrencies was 220,000 transactions and $83 million of volume,” Pieciak said. “So from 44,000 to 240,000. From $50 million to $83 million. And I thought, 'Those are big numbers.' And I just couldn't wait for the 2021 numbers to come in. We just got the 2021 numbers last week. And we went from 240,000 transactions to 1.6 million transactions. And we went from $83 million in volume to $800 million in volume in Vermont.”
The volatility of crypto worries Pieciak.
“In Vermont there's an intense interest in it,” Pieciak said. “It does concern me because I think of crypto as three things people should think about. One is the volatility of it. Bitcoin has gone down in value by 30 percent in a single day. Other cryptocurrencies are even more volatile; they go up and they go down. You know, there's an analysis that shows the connection between Elon Musk tweets and the price of bitcoin. So, you know, if he tweets something favorable, the price has gone up. If he's tweeted some unfavorable tweet, that price has gone down. So you do not want your investments, you don't want your retirement, you don't want anything in terms of long term saving, to hinge on the tweet of Elon Musk.”
Also, crypto should only be used for speculation, Pieciak said.
“In my opinion, it is the same as going to a casino,” he said. “You shouldn't invest your retirement. You shouldn't be investing the house fund or education fund. If you have money leftover after you have paid into your emergency fund, if you've paid off your high-interest debt, if you're saving sufficiently for retirement and you have money leftover, then you say, 'What the heck?' Maybe that's appropriate. But you also need to be aware of the of the frauds and the scams that are out there relative to crypto.”
Part of Pieciak's job was keeping Vermonters informed about the crypto market.
“We bring actions where appropriate,” he said. “We had an action that we brought a couple of months ago against a company called BlockFi. Our department initiated it, but it ended up becoming a $100 million settlement with all of the states in the SEC. They were offering a digital bank account — trying to compete with banks and credit unions. The banks and credit unions have to follow our regulations and laws, and we expect cryptocurrency companies to do the same. They weren't registered to do business appropriately. Yet here in Vermont, they had thousands of customers, and the customers weren't getting the appropriate amount of information and disclosure that they should have been getting.”
The end result was a significant penalty.
“Hopefully, it will set the standard for all of these companies thinking about operating here,” Pieciak said. “They need to follow the law. Just because they're new, and they have a new technology, and because we want to support innovation, they still have to follow the law. They have to do the same thing that every one of our companies here in Vermont does. And that's really important for us.”
Millions of dollars get lost in crypto frauds and scams, Pieciak said.
“People have to be aware,” he said. “In just this last year, in terms of the complaints. in terms of people saying they've lost money, that's a real concern. The fraudsters in the crypto space are not from Vermont. They're not from New England. They're not from the United States. They are from places across the globe, and we don't have any ability to help, unfortunately.”
Even if people understand the volatility and the risk of fraud, investors still need to understand crypto's environmental impact. It might not be immediately apparent, but crypto currencies operate on a blockchain, which is a large network of computers. And these computers require a great deal of energy to keep going.
“In some instances, there's a tremendous amount of energy that needs to be used to cool the computers also, so they don't overheat,” Pieciak said. “Bitcoin is the greatest user of that kind of energy. We did a back-of-the-envelope analysis about how much energy goes into one bitcoin transaction: you buy one bitcoin or you want to buy a piece of a bitcoin, or you sell a piece of a bitcoin, or you try to exchange it for another cryptocurrency. One bitcoin transaction is the equivalent energy usage of a typical Vermont house for two months. So it is a significant amount of computing power.”
That makes crypto as much of a contributor to global warming as a coal-burning power plant, Pieciak said.
“Some of these places are putting their mining operations next to coal plants that were essentially shut down,” Pieciak said. “And now the coal plant is running 24/7 to simply make sure that the energy is there for the crypto mining operation. So it's not just that they're using all that energy, but it's like, very dirty energy as well.”
At the time I began talking to Pieciak for this story, he had just resigned from DFR. I asked why he was leaving.
“Six years in as commissioner, eight years with our department, it definitely feels like we've done quite a bit,” he said. “It feels like a good time to look for a next challenge. It was not an easy decision. Our department, I really think, is running the best it can run. We have really good people. We've hired some recent hires that are really strong.”
It was hard to say goodbye, he said.
“We had our department meeting where I told everybody, and there wasn't a dry eye in the house,” he said. “Including myself. So it was really a tough decision. But I think there are some opportunities out there. And in the not too distant future, I would be potentially interested in political opportunities and elected opportunities. I definitely want to look at them and think about them carefully.”
At the time, I pressed to get a further statement about his future plans out of him, but that was the statement that ended our interview.
Then, a few days later, Treasurer Pearce announced that she was leaving office and two days later, Pieciak announced he was running for her job — with her blessing.
Pieciak had the grace to call me before he made the announcement.
“I wanted to fill you in about my future plans,” he said. “They are a little firmed up at this point. I'm planning to announce on Friday [May 13] that I'm running for treasurer. There are a couple of reasons. One, from a substantive viewpoint of what the treasurer does, I think it aligns well with my background and experience. At the DFR we regulate banks and the banking industry. Obviously, the treasurer has to manage the state's finances and manage the cash management, so he or she has to have a relationship with banks and understand investments and investment-related decisions.”
Pieciak pointed out that the DFR works with actuarial professionals on a host of issues similar to those worked on in the treasurer's office. He also brought up the Pension Task Force and how the treasurer needs to make sure the state's pension system is sound.
“It's critical we make sure we have pension systems that are going to be around for the long term,” he said. “We need them to be financially stable so that we can make sure state employees and teachers and staff have secure retirements.”
Another overlap with DFR is an interest in improving financial literacy.
“Vermont doesn't score very well on financial literacy in surveys that are conducted across the country,” Pieciak said. “So much of an individual's retirements are up to them, because we don't have defined benefit plans like we do with the state of Vermont or the teachers' system. So financial literacy and trying to help people save for their future and make right financial decisions is important. That is one of the areas where my current job sort of overlaps substantively with the treasurer's job.”
In broader terms, Pieciak said he is interested in the future of the state and thinks he can contribute.
“I can contribute to issues around affordability, and housing and workforce,” he said. “I'm eager to try to try to help where I can on these pressing issues.”
Pieciak has created a great deal of good will during his time in office. How it will play out in electoral politics remains to be seen. But in the words of fourth grade teacher and Pension Task Force member Molly Stoner, “Mike is, quite simply, the future of Vermont. I’m excited to witness his career as a public servant evolve. We’ll all be fortunate to have him on our side.”
Joyce Marcel is a journalist in southern Vermont. In 2017, she was named the best business magazine profile writer in the country by the Alliance of Area Business Publishers. She is married to Randy Holhut, the news editor/acting operations manager of The Commons, a weekly newspaper in Brattleboro.