How Bloomberg Plans to Save Wall Street

After Lehman Brothers collapsed last fall, it quickly became clear to the Bloomberg administration that the spiraling economic crisis was going to hit New York especially hard. The financial sector had been the city’s economic engine, driving real wages and estate prices up citywide.

So the Bloomberg administration did what it so often does when it wants to think big: It ordered the creation of a point-by-point action plan, fed in large part by work from a major private consulting firm.

Four months later, we now have a product, as Mayor Bloomberg on Wednesday unveiled his “Financial Services Revitalization Plan,” calling for 11 points of action in the wake of the economic crisis. In the past the city had turned to McKinsey & Company for a few big reports: this time it engaged Boston Consulting Group to help with the report, which was prepared by the city’s Economic Development Corporation.

The plan calls for about $15 million in city investment to encourage startups, boost early investment in growing companies, and convince financial firms in emerging markets to open or expand offices in New York (later this spring, Deputy Mayor Bob Lieber is planning a trip to Beijing with this end in mind).

Driving the report are two main themes: the need to heal a wounded financial services sector, an industry that may forever be much smaller than it was in 2007; and the desire to retain the talent lost in the waves of Wall Street layoffs, encouraging entrepreneurship on an individual level.

The plan also takes $30 million in federal money allocated to speed Lower Manhattan’s recovery after September 11, 2001. Presumably this $30 million comes from a program meant to encourage companies to grow in, or relocate to, Lower Manhattan: the Job Creation & Retention Program. The state’s development arm, the Empire State Development Corporation, initially had an unspecified amendment to the program listed on the agenda for a Wednesday board meeting, though the meeting was canceled.

As currently worded, that program already is intended to encourage job growth, as it gives grants to companies “in return for a minimum commitment of seven years to maintain more than 200 jobs in Lower Manhattan,” according to the ESDC’s Web site.

The city’s projections for the plan’s effects are rather ambitious: The report estimated that the actions are expected to create more than 25,000 jobs over 10 years (and more than 12,000 jobs over five years), totaling a potential $750 million in economic impact over the decade.

How Bloomberg Plans to Save Wall Street