Transcripts

"Commentary"-New York Is Down But Not Out

SUSIE GHARIB: By some estimates, the current turmoil on Wall Street could cost the state of New York up to 40,000 private sector jobs and as much as $3 billion in tax revenues over the next two years. But tonight's commentator says that doesn't mean an end to the financial capital of the world as we know it. He's Daniel Gross, senior editor at Newsweek.

DANIEL GROSS, SENIOR EDITOR, NEWSWEEK: In recent years, New York's status as a global financial capital has been challenged by threats from all over: the attacks of September 11th, 2001, the resurgence of London as a trading center, explosive growth in developing markets like China and India. In 2005, 24 of the 25 largest initial public offerings took place outside the United States. The consulting firm McKinsey & Company last year produced a 142-page report that identified a host of other risk factors: high corporate tax rates, restrictive visa policies, and, of course, regulations like the Sarbanes-Oxley law. But nobody seems to have identified the most serious threat of them all. Bear Stearns, Lehman Brothers, and Merrill Lynch weren't done in by foreign competition. These investment banks were laid low by cultures of excessive risk-taking and incompetent management. In 2008, Wall Street met its enemy, and it was itself. Can New York's financial center recover from this self-inflicted wound? The answer is yes. New York has weathered all sorts of shocks in its past century of dominance, from the panic of 1907 to the crash of 1987. The city's collective financial mind has always shown an ability to regroup, and to find new lines of business, at home and abroad. Today, the most profitable sectors of many of Wall Street firms are their foreign operations. As the U.S. markets continue to struggle, the bankers in Midtown and Lower Manhattan will increasingly have to look to the world's emerging markets for renewed growth. I'm Daniel Gross.