Comptrollers DiNapoli and Liu Say Wall Street Is Key to New York Economic Health at BALCONY Breakfast Forum

NEW YORK, NY (01/13/2011)(readMedia)-- BALCONY, the Business and Labor Coalition of New York, www.balconynewyork.com, held its third annual Breakfast Forum on December 16th at the Hard Rock Café in Times Square. Thomas P. DiNapoli, New York State Comptroller, and John C. Liu, New York City Comptroller, spoke on the Impact of Wall Street on the New York economy.

BALCONY Director Lou Gordon welcomed guests who were drawn from labor unions and businesses throughout the state. He also conveyed the good wishes from Alan Lubin, BALCONY co-chair for labor, who was out of town. While BALCONY, Business Co- Chair Bruce Ventimiglia introduced Comptroller DiNapoli.

Taking note of the state budget deficit of $9.5 billion for the coming fiscal year, and $14.5 billion in fiscal 2012-13, State Comptroller DiNapoli said that Wall Street is expected to earn $19 billion in 2010. This is 69 percent less that its profit of $61.4 billion in 2009, a record that was fueled by federal assistance and low interest rates. Although Wall Street's job losses during the recession may have peaked at 30,900 last August, he warned that when job growth resumes, tax revenues will still not be sufficient to solve the budget problems confronting New York City and State. Both have relied on Wall Street's high compensation, profitability and capital gains for revenue. Wall Street contributed 13 percent of city tax revenues before the financial crisis, but only 7 percent in fiscal 2010. Tax revenues from Wall Street represented 20 percent of state spending before the crash, but only

15 percent in the past fiscal year. Saying that the state cannot continue to count on Wall Street revenues, he said that the current budget crisis requires the full engagement and participation of local governments, organized labor, business, non-profit groups and taxpayers.

City Comptroller Liu pointed out that $1 billion in cash bonuses to Wall Street translates into $20 million in personal income tax for the city, but that non-cash bonuses, including restricted stock, do not generate taxes immediately. New York City revenues have been adversely affected by the curtailment of bonuses, although personal income tax revenues represent only a small part of personal income taxes. "The city wants reforms that lead to stability," he said, "particularly in the areas of derivatives trading, which must be brought out of the shadows. New York City is too dependent on Wall Street because it does not have enough other industries," Liu said. He suggested three ways to diversity industries in the city – a greater emphasis on education, an embrace of globalization, and an increase of purchases of goods and services from businesses owned by women and minorities.

A panel of experts followed up the comptrollers' talks. They were Arthur Cheliotes, president of CWA Local 1180; Karen Elinski, vice president and associate general counsel Government Relations of TIAA-CREF; Deborah Solomon, Managing Member, Juniperhill Asset Management; Andrew Pallotta, Executive Vice President of the New York State United Teachers, Bruce Ventimiglia, chairman of Saratoga Capital Management and co-chair of BALCONY, and Barry A. Weprin, a partner at Milberg, LLP.

Deborah Solomon, of Juniperhill Asset Management , describing herself as "pro-Wall Street," called on Wall Street to focus more attention on small businesses. She said that pending regulatory changes will discourage banks and even hedge funds from lending to small businesses. She said that this year bank loans represented less than 5 percent of all loans to small business.

Karen Elinski of TIAA CREF said that the 21st century will have a knowledge-based economy. Observing that the State University of New York and City University of New York rely on state funding, she said, "We have to keep tuition down so students can attend them and graduate. SUNY and CUNY provide centers of excellence. More students will need to attend college and will need preparation in finances, information technology and the sciences."

Arthur Cheliotes, President of CWA Local 1180 pointed out that during the fiscal crisis, small businesses in North Dakota were able to get loans. He said that North Dakota has a state bank that is not backed by the FDIC, and it has an unemployment rate of 3.8 percent, compared to 8.3 percent in New York State. "In New York State," he said, "small businesses are driven to use credit cards for capital, which is a way to make people pay a higher rates. State pension funds should consider creating a state bank. If we don't have a middle class of consumers," he warned, "it all collapses."

Barry Weprin, Partner, Milberg, LLP stressed that a balance between self-interest and regulation needs to be struck and the need to institute reforms like that of the Martin Act.

When discussion grew heated during the question and answer question, Bruce Ventimiglia said, "As a society we don't have to agree on all things, but we do have to agree on some things."

One point of agreement was that Lou Gordon had told fewer jokes at this year's breakfast. Those who are interested in seeing if Gordon's joke deficit continues should come to the next BALCONY event.

Co-sponsors for the event were TIAA-CREF Financial Services; New York State United Teachers; Saratoga Capital Management; USI Affinity; MedReview; Milberg; WCBS NewsRadio 880; CWA Local 1180; Meridian Capital Partners; and Content Critical.

To access a special video report on the BALCONY Wall Street Forum the BALCONY go to:

http://www.balconynewyork.com/WallStreet2010/report.htm