Harry Moroz

A Good Thing That Is In Our Economic Interest

New York Senator Chuck Schumer responded to Mayor Bloomberg’s pushback against financial reform legislation in a New York Post op-ed on Friday:

As Mayor Bloomberg has rightly pointed out, the financial-services industry is one of New York's most important employers. And the reforms we are proposing will serve to strengthen that.

The certainty and stability that financial reform will provide will only make the city more popular as a global financial center for investors and those seeking to raise capital.

But providing certainty and stability is essential.

Senator Schumer is of course right that New York’s economy cannot rely on a cash cow that implodes every few years and, on rare occasion, brings the entire economy down with it. But the case the SEC has just announced against Goldman Sachs for fraud – the investment bank sold investors securities that it guessed would blow up and bet that this would happen – brings up a more fundamental, and perhaps less politically palatable, issue for New York.

Financial reform is about much more than creating certainty and stability. When people argue, as Harold Ford did, that New York politicians should protect the financial services industry, they bank the city’s future on an industry whose value-added, especially in more recent years, is questionable. The debate about the value of financial innovation will continue in perpetuity, but the work done in the financial sector has reaped profits for its executives disproportionate to the value that work added to society at large. That New York politicians should try to perpetuate these profits in order to siphon off tax revenue and eke out the economic stimulus inside banker’s wallets, rather than working to improve the quality of the other 83 percent of its private-sector jobs seems at best greedy and at worst short-sighted.

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Posted at 2:54 PM, Apr 16, 2010 in
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