New York as the US money center: staying competitive is the key
On first glance, the formidable architecture of lower Manhattan gives one the impression that New York is the rock-solid center of money. The World Trade Center and her acolyte buildings rise sheer and mighty from the sea. It is an architecture that New York Times critic Paul Goldberger describes as reflecting the ''hushed power'' of money.Skip to next paragraph
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Little today seems to threaten the national and international predominance of the megabanks, brokerage firms, and stock exchanges of New York. If anything, they are growing stronger - banks pushing to go interstate, brokerages diversifying and becoming quasi-banks themselves, and stock exchanges reaping the benefits of a 14-month-old bull market.
But a twist or turn in tax laws, technology, economy, or city attitude, say a number of financial analysts, could scatter imperial Wall Street to the far corners of the globe.
''Nothing is set in stone, especially in the financial industry,'' says William C. Freund, the New York Stock Exchange chief economist. ''New York is going to have to be extremely competitive in order to keep and to attract new business.''
Dr. Freund characterizes the financial sector and its peripheral businesses (printing, public relations, data processing) as New York's biggest growth industries: ''The jobs, the income generated, show that New York has benefited enormously.''
New York is the financial giant that it is, says Richard Scribner, American Exchange executive vice-president, because the nation's two largest stock exchanges (the NYSE and the Amex) have fostered a huge population of brokers and traders - and the brokers and traders not only need the exchanges, but they also need related financial services. The presence of the big investment bankers in New York - such as Merrill Lynch, E.F. Hutton, Morgan Stanley - makes the city essential to companies going public.
Interestingly, New York also is first in marketmaking for the over-the-counter (OTC) trade. OTC is generally considered the entrepreneurial sector of the securities industry; it is often associated with investors far from the financial power centers.
Officials of the securities industry estimate that 350,000 jobs rely directly or indirectly on the New York brokerage trade alone, and this represents $5 billion to $6 billion in wages. Many more jobs are involved in banking, insurance, and all the supporting fields, ranging from Wall Street's fast-food spots to its executive limosine services.
But high taxes and a somewhat worsening quality of life, coupled with a relatively new decentralization mechanism called the Intermarket Trading System, could change all that. The ITS allows traders at exchanges across the country to gain access to stocks listed on a variety of exchanges, including New York's. Earlier this year, the NYSE, the Amex, and the Securities Industry Association persuaded New York City to withdraw a proposed stock-transfer tax because of the possibility that - coupled with the ITS - the tax would act as an incentive to the financial industry to relocate and simply access the New York markets from elsewhere.