Attention New York: on the eve (roughly) of the one-year anniversary of Lehman Brothers’ collapse, a new report from J.P.Morgan in London opines that because of the effects of eight likely financial-regulatory changes worldwide, “what is certain … is that global [investment] banking profitability will decline,” not just temporarily but structurally (that is, even after the recession is over).  

The regulatory changes that J.P.Morgan analyzed include fixes to how banks structure and trade financial instruments such as credit-default swaps, as well as higher capital requirements (limits on borrowing).

As an example, the researchers figure that without the new regulations in place, Goldman Sachs would earn $7.5 billion from its global investment-banking operations in 2011. With the proposed regulations, it would earn $6.5 billion, a 13 percent haircut. Morgan Stanley would have earned $4 billion from such operations in 2011 with no new rules in place; instead, under contemplated new restrictions, it would earn $3.4 billion, a nearly 15 percent haircut.

Of course, lots of this is alchemy — and J.P.Morgan could be wrong.

But the point is: New York’s local and state politicians have now had more than a year to think about the fact that the number one source of money for the city and state, an ever-growing Wall Street, might not be so ever-growing anymore.

What have they done about it?

Nothing — except, in the state’s case, hike income taxes on wealthy earners and MTA payroll taxes on downstate jobs. These measures will make it harder to attract entrepreneurs to replace some — not all — of the jobs and income we’ve lost.

Maybe Wall Street will come roaring back, and the city and state can continue business as usual, as they’re already doing. But it’s an unacceptable risk to take.

You may also like

Essential Plan surplus hits $3B

As Governor Cuomo pleads for financial help from Washington, one of his state's programs is sitting on $3 billion in unspent federal aid: the Essential Plan. Read More

A grim toll gets worse

The full toll of the coronavirus pandemic in New York is likely thousands higher than the official death tallies, according to newly released federal data. Read More

More fiscal turmoil for Medicaid

In a sign of pandemic-related strain on state finances, the Cuomo administration is postponing a series of multi-billion-dollar Medicaid payments over the next three months. Read More

Upstate escapes the worst

With the coronavirus pandemic hitting some parts of New York much harder than others, Governor Cuomo has signaled that he will begin to relax shutdown restrictions in low-virus parts of the state. Here's a closer look at how infection and fatality rates vary from region to region. Read More

Another Medicaid payment delay

State Medicaid spending dropped to nearly zero in March as the Cuomo administration again delayed payments to balance the state's books. Comptroller Tom DiNapoli's cash report for March, posted on Wednesday, showed just $9.2 million in Medicaid disbursements. The state's share of Medicaid spending averages almost $2 billion per month. The comptroller's numbers reflect so-called Department of Health Medicaid, which covers the bulk of the program but excludes most spending on recipients with mental disabilities. Read More

Why New York?

#NYCoronavirus: It's increasingly apparent that New York is suffering more severely from the coronavirus pandemic than any other part of the U.S. and most of the rest of the world – raising stark questions for city and state leaders. What is it about New York, and especially New York City, that made it especially vulnerable to infection and death? And how can that be changed before the next virus breaks loose? Read More

DOH posts age & county data

#NYCoronavirus: The state Health Department released additional coronavirus data that gives a clearer picture of which counties and age groups have been hardest hit by the pandemic so far. Read More

Winning last year’s battle

The new state budget finally takes credible steps to address the Medicaid crisis of recent history. What's missing is a clear plan for weathering the far larger crisis of the present and future. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130


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.