Although he's been coy about his plans for life once he leaves office, New York City Mayor Michael Bloomberg has not hesitated to offer his views about the future of the Big Apple. But while many of his statements have been optimistic forecasts of growth, earlier this month Bloomberg presented a relatively anxious report about New York's future as the world's financial services capital. The report, "Sustaining New York's and the U.S.' Global Financial Services Leadership," which was prepared by McKinsey, argues that the current legal and regulatory environment could cause the U.S. to lose its position as the center of financial services.
It was a bit odd to see Bloomberg accompanied in his discussion of the need to ease Sarbanes-Oxley requirements and other legal requirements by Senator Charles Schumer, D-N.Y., and Governor Eliot Spitzer, neither of whom would be characterized as big supporters of fewer restrictions on the U.S. financial services industry. But these three politicians are smart enough to know how high the stakes are.
According to the new report, the U.S. could lose out on as much as $30 billion annually in financial services revenues -- which could translate to as many as 60,000 lost jobs -- by 2011. Accordingly, the officials endorsed the report's recommendations, which included easing immigration restrictions facing skilled non-U.S. professional workers, implementing the Basel II Capital Accord, and modernizing financial services charters and holding company structures.
Yet while the report's proposals may be worthy of implementation, regulation is only part of the story. Technology has transformed the financial services business in such a way that location almost doesn't matter anymore. In other words, Wall Street doesn't literally have to be Wall Street.
Similarly, alternative channels (primarily e-banking/payments) that enable true anywhere, anytime banking are gaining favor. Furthermore, advances in networking, mobile/wireless capabilities, and collaboration and project management tools (not to mention lifestyle and cultural changes) are making it easier than ever for people to do their jobs remotely. All this is rendering the concept of a literal money center increasingly obsolete.
That's not to say that New York City should throw in the financial services towel. But there may be certain trends that just can't be halted.