Wall Street 'austerity' hits close to home
Wall Street is surrounded by the East River on one side and Trinity Church on the other, which pretty much sums up the fate of financiers in today's day and age.
A little more than a year after Goldman Sachs CEO Lloyd Blankfein said he was doing "God's work," the rest of the industry has been left for dead in the wake of the worst financial crisis of our lifetime.
Banks and brokerages have cut - or will cut - 100,000 positions in financial services, and 35,000 of them are in New York. Bonuses have been slashed by 30% to 50%.
While few will shed a tear for bankers in the bunkers, there is an additional twist: Institutions have capped the cash component of the compensation mix, opting instead to issue restricted stock that can't be sold for a few years.
We would be wise to pay attention to this evolution. While securities activity drove 14% of state tax revenue last year - 7% in New York City - the suddenly crimped cash flow will dampen discretionary spending in everything from retail sales to real estate.
Billy Ray Valentine famously said in "Trading Places" that the best way to hurt rich people is by turning them into poor people. Though Wall Street executives are universally reviled, angry New Yorkers might want to be careful what they wish for.
Todd Harrison is the author of "The Other Side of Wall Street" and the founder and CEO of Minyanville, an Emmy Award-winning financial media platform. Read him daily at www.minyanville.com.