Can Good Come from the Sins of Wall Street?

Eugene-Grygo-03.29.12January 20, 2015

(Contribution from Minding the Gap, a blog by FTF News editor, Eugene Grygo.)

Thanks to the fines imposed upon Wall Street and insurance firms for their sins during the Great Recession, the New York State government has a $5.1 billion surplus for fiscal year 2016. New York Gov. Andrew Cuomo and other politicians in Albany are scrambling to sort out how to spend the windfall in the best way possible.

As the state capital reviews its options, many others are also chiming in.

New York City Comptroller Scott M. Stringer is arguing that NYC’s “fair share of New York State’s $5 billion budget surplus is $2.2 billion.” Stringer says that the state’s funding for New York City suffered a “dramatic decline … between 2009 and 2014.”

In addition, Stringer says that New York City “has helped the state weather many an economic downturn in the past. Now that we’ve turned the corner, it is time to do what’s fair. When Albany invests in the city’s infrastructure, education and essential services, it benefits all of New York.”

From another corner, The New York Times deigned to comment on a local issue and is arguing that the surplus be spent on: the state’s drinking water facilities and its wastewater infrastructure; the Metropolitan Transportation Authority because of a looming $15 billion deficit in its five-year capital plan; improving the state’s major roads in poor condition, with thousands of bridges requiring repairs; the purchase or protection of farmland, “especially in the upper Hudson region;” and a rainy day fund for “leaner times.”

Before I reveal my preferences for how the windfall should be spent, I asked my colleagues at Financial Technologies Forum (FTF) to put forth their suggestions.

Here are their preferences:

  • “I suggest exactly what Wall Street’s senior execs would, if they could: ‘Bonuses are down! Lay-offs are rampant! Big government is breathing down our necks! Give us back the damn money!’ ”
  • “Off the cuff, I think it should be invested in programs to help people struggling in the New York society, like developing more programs to help the homeless and working poor.”
  • “The $5 billion would go a long way to paying [school] districts back the money they are owed because of the infamous GEA [Gap Elimination Adjustment] and the state’s refusal to disburse the court-ordered foundation aid.”
  • “I’d say the money should be invested and the interest/dividends spent on public education, particularly subsidies to less well-off families for kindergarten and pre-K.”
  • “Maybe throw up a nice statue of Preet [Bharara, the U.S. Attorney for the Southern District of New York] and Benjamin Lawsky [New York State’s Superintendent of Financial Services] — preferably in the financial district. Maybe they could appear holding up the Scales of Justice together, standing atop a pile of money bags and the broken bodies of their adversaries.”
  • “Pay for some much needed reforms and repairs over at Rikers Island [Prison Complex].”
  • “I was taken aback that no percentage of the settlement would be going to education. It seems $160 million is going to NYC police officers for tablets (which seems a bit high) and not a penny is going to New York public schools that are still playing catch-up to the budget cuts and student programs that were cut due to the recession in 2008. So, my suggestion would be education programs.”
  • “Establish a small fund that could give grants to New Yorkers who have ideas for projects that would benefit the city in some way — community gardens, public works of art, things like that. And, perhaps, throw some sort of large aquatic beast in the big pond in Central Park just for kicks.”
  • “I say feed the homeless and elderly.”

As for my suggestions, I agree with The New York Times that some funds should be set aside to fix roads, bridges and other key components of the state’s infrastructure as they benefit all state residents.

I would also like to see a sizable sum set aside for Wall Street whistleblowers as an incentive to keep the big banks and other firms on their toes.

You can also join in the conversation by taking our quick “Finger on the Pulse” survey on the home page  If you scroll down, you can take part in the poll or contact me directly

This entry was posted in Compliance, Financial Crime, Guest Blog, Regulation and tagged , , , . Bookmark the permalink.

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