There is good economic news to report: The unemployment rate in New York City has dropped to 8.6 percent. That’s a two-year low. And the good news on jobs comes despite a continued lull in construction, a traditional source of well-paid, blue-collar work.
Now the bad news: Washington is considering new banking rules that could very well strangle the city’s economic recovery. Senators Charles Schumer and Kirsten Gillibrand are leading the effort to stop overregulation, but it’s not clear whether they will be successful.
Last year’s Dodd-Frank reform bill required U.S. banks to implement changes, including new collateral requirements, in dealing with derivative transactions. The new rules are to be the subject of congressional hearings in Washington next month.
The unfairness of the Dodd-Frank rules is clear. While U.S. banks would have to abide by the new regulations, banks based elsewhere would not. That will put the city’s great financial institutions–JP Morgan Chase, Morgan Stanley, Goldman Sachs and others–at a huge competitive disadvantage. These institutions, of course, happen to be the financial engines that drive the city’s economy.
If they can’t compete in the global marketplace, the city’s economy surely will suffer. The unemployment rate–still too high–inevitably will increase to double digits.
New York’s two senators and its congressional delegation need to remind their colleagues that it would be foolish indeed to impose unfair rules on a vital sector of the nation’s economy. It’s a shame, though, that the argument has to be made in the first place.