Thompson Addresses Wall Street Turmoil
New York City Comptroller William C. Thompson, Jr., addressing the current turmoil on Wall Street and uncertainties about New York City's economic future, insisted that: "We are ready for the trying times that no doubt are ahead."
"With every downturn New Yorkers have encountered our city has rebounded stronger than before," Thompson said, addressing a breakfast hosted by Citizens Union and New York University's Robert F. Wagner Graduate School of Public Service. "That is the spirit of New York City. We are fighters. We are resilient. We are innovators."
Thompson's remarks addressed the challenges facing New York City's economy amid this week's Wall Street chaos, offered assurances to members of the New York City Pension Funds, and highlighted steps taken by the City and Comptroller's Office to weather any fiscal storm.
"As we gather today, New York faces greater challenges than perhaps at any time since 9/11 and the recession that gripped our city then," Thompson said. "It will take months if not years to understand the full impact of the current crisis in international financial markets, but one thing is certain: The crises roiling the economy are already having a disproportionate impact on families here in the nation's financial capital."
"It is important for me to reassure the approximately 640,000 retirees, beneficiaries, and City employees who are invested in the system that their money is safe and secure," the Comptroller said.
Thompson serves as investment advisory to the five New York City Pension Funds, with assets amounting to more than $100 billion. Accordingly, his office has been closely monitoring the financial scenario playing out on Wall Street.
"The current turmoil on Wall Street will obviously have major adverse impacts on New York City's economy," he said. "Before the startling events of the past week, we had forecast a loss of 25,000 jobs in the city's financial services sector. Considering that Lehman Brothers had over 12,000 employees in the city and the immediate vicinity, and AIG has almost 7,500 in New York City alone, the job losses may be ever deeper than what we originally forecast."
Thompson estimated that a loss of only 25,000 jobs in the securities industry could cause a loss of another 37,500 spread throughout the city's economy. And this, he noted, did not even include the impact of losses related to the Bear Stearns collapse.
Furthermore, he noted, the Wall Street dislocations will impact the city's tax revenue. The financial industry accounted for more than 45 percent of the city's business income tax collections in recent years, amounting to about $5.5 billion in Fiscal Year 2008 alone. However, Thompson noted those collections already were expected to drop by 10 percent during the current fiscal year.
"New York City has acquired its reputation as a premiere place to live and do business by keeping crime down, by pursuing exciting new economic development initiatives, by luring new industries like motion pictures and high tech, and by supporting a thriving entertainment and hospitality industry," he said.