New York State Comptroller Thomas DiNapoli on Friday December 4, 2009 discussed Wall Street’s economic recovery and its impact on New York City to business and labor leaders. The Breakfast forum, hosted by the Business and Labor Coalition of New York (known as BALCONY), took place at the Hard Rock Café in Midtown. Also speaking on the program were New York City Comptroller Elect John Liu, Bruce Ventimiglia from Saratoga Capital and Fiscal Policy Institute Chief Economist James Parrott.
Comptroller DiNapoli talked about the effects to New York City from the severe job losses in the securities industry. As the crisis unfolded, financial firms were devastated resulting in a global recession. Wall Street’s power to make money which benefited the city through the years began working in reverse, leading not only to financial hardship for New York but also rapidly increasing job loss throughout the five boroughs. Employment in the securities industry in New York City peaked at 189,200 jobs in November 2007. As of September 2009, the industry had lost 28,300 jobs or a decline of 15% with overall job losses continuing.
The root cause of the current financial crisis was excessive risk-taking by the finance industry. The crisis was exacerbated by a decline in housing prices across the country that began in 2006. By the end of 2007, financial firms were reporting losses related to asset-backed securities, and as 2008 progressed, losses widened to other types of debt instruments. Equity markets fell, and firms rushed to raise capital in order to remain solvent.
The crisis peaked in September 2008 when Lehman Brothers collapsed and credit markets froze. Fortunately for the big apple, a comeback of the financial sector is in the works. Wall Street is recovering much faster than anyone had anticipated and profitability is on track to exceed 2006 levels. While the pace of Wall Street job losses has slowed considerably, the industry is not yet adding workers on a sustained basis.
Thomas P. DiNapoli took office in February 2007 as the 54th Comptroller of the State of New York. DiNapoli, as the state’s chief fiscal officer, is responsible for managing its $154.5 billion pension fund, auditing the pending practices of all state agencies and local governments, overseeing the one million-member state and local government retirement system, reviewing the New York State and City budgets, approving state contracts, and administering the state Oil Spill Fund. Before becoming Comptroller, DiNapoli represented the 16th Assembly District in northwestern Nassau County for 20 years.