Too Big To Fail model is most profitable
Why the Preemptive Break Up of Financial Institutions Would Be Bad for New York -- and America
Dear Members of the New York State Congressional Delegation,
The Partnership for New York City is an organization of business leaders who are committed to the continued success of the city and state economy. We are writing because we know you share this commitment and that you are working to develop policies that will lead us toward economic recovery and full employment.
In that regard, we want to alert you to proposed legislation that could diminish America's standing as a preeminent, global financial center and inflict particular damage on New York. This is the call for the preemptive and arbitrary break up of large, complex, and interconnected financial institutions. Enacting such a provision would give foreign competitors the opportunity to capture market share among the world's largest corporate and investor clients -- those that demand the huge capacity and global reach that only our biggest U.S. banks have. We cannot afford for proposals like this to make it into the financial reform package and we hope every member of the delegation will make it their business to oppose them.
The "FIRE" sector - finance, insurance, and real estate - is particularly important in New
York. It produced more than $363 billion in economic output in 2008, accounting for 31.7% of New York's Gross State Product, and currently employs 684,100 people statewide. The securities industry has the greatest impact, with every Wall Street job responsible for creating or maintaining 3.3 additional jobs in other sectors. In terms of taxes, financial services represents 20% of the state and 12% of the city tax revenues.The global finance industry, with companies and top talent that could locate anywhere in the world, is heavily concentrated in New York, with benefits that reverberate across the country. To retain its position as a global financial leader, the U.S. needs institutions of all sizes, business models, and expertise. For a global city like New York, large, multinational institutions are what connect our local businesses, large and small, to markets around the world and attract foreign companies to come to New York to raise capital and generate jobs. (One out of nine employed New Yorkers works for a foreign company.)
Reform of America's financial regulatory framework is essential. There are plenty of ways to achieve reform and reduce risk and taxpayer exposure without destroying institutions that are the anchors of our global financial center. We hope you will work with us to distinguish useful reform from overkill reactions.
Thank you for your consideration.
Allow me...
Show me one person who is against economic recovery and full employment? Saying this does not give you exclusive ownership of this idea or that your ideas will produces such ends.
While there are other ways to reduces the risk of too big to fail, these methods seem to center around allowing banks to commit greater fraud. This letter does not diagram ANY leadership to accomplish risk reduction.
In this letter there is no analysis on the global financial industry. Foreign competitors may get a real advantage if we pre-emptively break up our banks but the real question is,should these foreign banks be broken up too? If so, can we apply laws to level the playing field until they do?
Now for the numbers: $363 b in economic output in 2008, 31.7 of NY's GSP, employs 684,100 people state-wide. I'm not really sure of the point of the numbers except that a few people may move out of New York or out of the United States. It should be noted that an industry that produces virtually nothing other than stealing other peoples' wealth and calling it industry profit is does not have "benefits that reverberate across the country." It's hurting all the other sectors where that money is coming from.
Lastly, you know how you always hear about layoffs when two companies merge? Well, when they split the opposite happens. They need to hire more people. This reverse redundancy is a point that most banksters or large companies don't like to tell you. Splitting up the banks would produce more competition, less monopoly (or oligopoly), lower rates, lower APRs, more jobs, and more State GSP.
Will you kindly explain why "Too Big To Fail" is a good thing again?