The Backstory of the Financial Collapse

Call it Gall Street. How else to describe an industry that applauds nearly $500 million in bonuses for executives taking an entire economy down with them?

These kinds of storms hit New York—still the nation's financial citadel—first and hardest. Last week, the city's fiscal guardians—Mayor Bloomberg, Comptroller Bill Thompson, and Council Speaker Christine Quinn—rushed to reassure the city that fallout will be minimal. Thompson and Quinn are each hoping to snag Bloomberg's job next year. Bloomberg seems more and more inclined to stay put, maneuvering a law change to give himself a third term in office. He seized on last week's economic cataclysm as evidence that only a billionaire businessman is up to this particular crisis.

"The city is as well positioned as it's ever been to handle turmoil on Wall Street," the mayor said last Monday. But that's not saying much, and from a business superstar we would expect more. While Bloomberg gets points for holding back $6 billion for this kind of rainy day, the fact remains that his administration has continued the city's long slide into Wall Street dependency.

The morning after the massive $85 billion AIG bailout, Thompson spoke to a Citizens Union forum at NYU's Wagner School. The comptroller mock-mopped his brow, sighing that the week was only half over. "The crises roiling the economy are already having a disproportionate impact on families here in the nation's financial capital," he said. There's worse to come. The city's financial industry has accounted for more than 45 percent of the city's business income tax in recent years, amounting to $5.5 billion in the last fiscal year, Thompson noted.

"We have been way too dependent on Wall Street for decades now," says Jonathan Bowles, director of the Center for an Urban Future, which monitors city job growth. "It never seems to change." Bowles credits Bloomberg's administration with "some movement" toward diversifying the economy, but not enough. "It only seems we are more dependent than ever on the financial industry, at least when it comes to city revenue. This should have been a priority from the get-go. It hasn't been enough of one."

Maybe the mayor's policy-makers just need an incentive. How about "Avenue of the Avaricious"?

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