Press Room
In the weeks after the Lehman Brothers investment bank collapsed last fall, Robert C. Lieber, the deputy mayor for economic development, was predicting that Wall Street would confound doomsayers by bouncing back faster than expected and reaffirm New York as the financial capital of the world.
Last week, Mr. Lieber and his colleagues at City Hall sounded a very different tune: most of the financial jobs lost in this crisis, they predicted, would not be regained in the next several years — if ever.
“We’re not looking to recreate what was here before,” Mr. Lieber said. “We’re acknowledging the changes and looking to diversify within financial services and outside financial services.”
That admission, as much as any other, highlights just how significantly the thinking about Wall Street has changed in a matter of months.
Early last year, city officials were still fretting about the rise of London’s financial industry and the competitive threat it posed to New York. Now they are worried about filling a huge hole in the city’s economy while trying to retain thousands of laid-off financiers before they scatter across the globe.
They now forecast that the financial services sector that powered the city’s prosperity will shed 65,000 jobs as a result of the financial crisis. Almost half of them will come from the highest-paying pursuits like investment banking and the sales and trading of stocks and bonds, according to an analysis the city commissioned from the Boston Consulting Group.
The study concluded that what remained of the sector would be far less profitable than it was. In 2007, its $70 billion profit amounted to about 22 percent of its revenue, the study found. But it concluded that that profit margin could decline by half or even three-quarters before it started to grow again. The speed and depth of the reversal of Wall Street’s fortunes have shaken the faith of city officials in the staying power of the biggest corporate employers and driven a rapid overhaul of their economic development policies. No longer can they count on the financial sector to supply one-third or more of all the compensation paid out in the city, as it did in 2007, or to fill the coffers of the city and state governments with tax revenue.
