The symbolism of the OWS demonstrator’s decision to hold their protests on Wall Street is abundantly clear: as the center of the nation’s financial system and workplace of some of America’s wealthiest, it is an obvious target for those who believe that America is run by greedy and rapacious businessmen with no regard for ordinary Americans. (Too true too often, by the way.) Yet even as the national spotlight turns once again towards downtown Manhattan, Wall Street bankers have begun to slip out the back door. The financial industry is shedding jobs on Wall Street, and growing in regional centers. From the WSJ:
The New York state comptroller’s office predicted this month that Wall Street would cut 10,000 jobs by the end of 2012, bringing the total losses since January 2008 to 32,000. Bank of America last month announced global staff cuts of 30,000, or 10% of the firm’s workforce.Meanwhile, regional banks like KeyCorp, Fifth Third Bancorp in Cincinnati, SunTrust Banks Inc. in Atlanta and U.S. Bancorp in Minneapolis, have been adding bankers for stock, bond and loan offerings, as well as mergers and acquisitions. KeyCorp, for example, has increased its investment banking unit by 36% since the beginning of 2010 and Fifth Third has 20 investment bankers, up from zero a year ago. […]Bob Marcus, a former capital markets banker at Citigroup Inc., joined Fifth Third’s office in Atlanta in early 2010 to build a team of investment bankers. He has hired 20 people, many of whom previously worked for large banks.
The nation’s business and financial power has been decentralizing for some time. Fortune 500 company headquarters used to be concentrated in New York; now they have scattered to the four winds. Finance has been slower to move, but the rise of regional banking powerhouses and the troubles of the national financial industry are shifting financial power as well.As I pointed out in some recent posts, large banks have been looking to move away from the congestion and high taxes of deep-blue New York for some time. Back offices are moving to cheaper states or to India, front offices are shrinking as cost pressures rise, the number of top financial firms is shrinking (remember Lehman?), and automation reduces the need for human employees from top to bottom in the financial services industry.A shift in the focus of the financial services industry to smaller companies scattered throughout the United States would be a welcome sign of national renewal. Rising regional firms are often where the innovation occurs and where job and wealth creation comes fastest. Much of what Wall Street has been up to in recent years is what the Japanese used to call ‘zaitech’; financial engineering rather than investments in new and productive economic capacity in the real world became the chief business of our financial elites. This is both the sign of an unhealthy economy (investors perceive few big opportunities in the real economy) and a cause of further distress (hot money chasing fast returns by creating ever more complex financial products and hedging strategies usually ends with a big, ugly crash). Finance needs to re-engage with the real American economy; a shift in power to regional firms and the relative decline of Wall Street as a national financial center could help.This is a good thing for America, but it ruinous for New York. The big apple’s “luxury city” revitalization has been built on the back of its one successful industry. If Wall Street leaves, New York will have a much bigger problem on its hand then a few hundred angry kids in Zucotti Park, and the state and municipal employee unions who are enthusiastically participating in OWS protests will face a Rhode Island style meltdown.