Wall Street is somber Monday as it loses two of its independent investment banks, Lehman Brothers Holdings Inc. and Merrill Lynch & Co., causing a trickling effect throughout New York and neighboring New Jersey. With the two banks employing
85,000 New Yorkers and New Jerseyans there is no doubt that the loss of the two banks will be felt in the regional economy.
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As a matter of fact, the political impact is already clear as New York Mayor Michael Bloomberg canceled a
trip to visit
California Gov. Arnold Schwarzenegger. Instead, Bloomberg, who made his money on Wall Street, stayed home to assess the economic ramifications of Lehman's bankruptcy filing and Merrill Lynch's sale to Bank of America Inc. At the
same time, New York Governor David Paterson asked state insurance
regulators to allow American International Group Inc. to access $20 billion of its own capital to
avoid even more
potential job losses.
Real estate experts are expecting the blow to affect the housing
market because year-end Wall Street bonuses have helped
sustain
real estate prices over the past few years, according to Crain's. This
may mean more investment bankers could be looking to sell their chic
pads. However, there may not be enough buyers because of the downturn
in the job market. It will also mean less money for New York local
businesses that depended on commerce from the investment banks.
It will also affect New Jersey's state budget and economy, Gov. Jon Corzine warned.
A quarter to a third of New
Jersey's economy depends on Wall Street, either directly or
indirectly,
according to a report in Newsday. The losses will impact
local businesses, transit services and attractions such as Atlantic
City and the Jersey shore.
- Maria Woehr
