The details of Citigroup‘s FDIC-brokered purchase of Wachovia point up some long-term implications for New York’s economy.

Specifically, in return for shouldering $270 billion in potential losses at Wachovia’s property-related assets that would otherwise be Citi’s responsibility in the merger, the FDIC will take a $12 billion stake in the commercial and investment banking behemoth.

While the government won’t have voting shares, its ownership presence at the bank solidifies the idea that for the foreseeable future — which doesn’t extend past the next five minutes, in these markets — surviving large financial institutions will operate like government-regulated public utilities. They won’t be the same freewheeling private-sector financial firms, with risk-taking balance sheets as the tip of their spears, that they were two years ago.

New York would be a different city if it had to depend on boring old government-regulated monopolies to fund its budget and drive its economy. In the coming years, the city might get a glimpse of what such a city would look like, and what kind of management challenges it would pose.

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.