Payback: Could New York City Squeeze Big Banks For $120 Million?
Posted on May 11, 2011 8:10pm
A coalition of groups planning a coming rally against Wall Street bankers has hit upon an straightforward, if perhaps overly optimistic, solution for a sizable slice the city's budget shortfall.
Just force the big banks to take 20 percent cut on city contracts and New York can save big, they say. The city stands to gain up to $120 million, based on the estimated $600 million in deals it has with JPMorgan, Bank of America, Morgan Stanley and other corporations to perform tasks like disbursing child support payments and managing income tax remittances.
The May 12 Coalition's proposal calls for the banks to take the cut as "a modest concession to the public good in light of their enormous taxpayer funded bailouts." That money is just one part of an eye-popping $1.5 billion the coalition estimates the Bloomberg administration could save by taking the bankers and others to task for sending the country into a recession.
The idea is intriguing -- but not very realistic, according to Charles Brecher, the research director for the Citizens Budget Commission. Brecher says smaller deals have happened in the past, pointing to the MTA's success last year in negotiating $40 million in concessions from vendors.
But the May 12 proposal, Brecher said, "is not being presented in the same collaborative manner; this is about blaming people and saying it's 'payback time.' This will not work."
"Overall this is not a very realistic or sensible set of proposals," he added. "Instead of the May 12 Coalition, this should be called the April 1 Coalition -- it's foolishness."
But Michael Kink, executive director of the of the union-backed Strong Economy for all Coalition, said, "It's going to be hard, but I think it's nowhere near unprecedented."
Kink presented a slightly less confrontational program than the coalition's report does, saying that the Bloomberg administration needs to bring the banks to the table and see what happens. "I think you've got to create an environment where you're discussing the issues."
So far, Kink asserted, Bloomberg's office has taken a far too complacent approach. "Bloomberg is zeroing in on services for working people and poor people, and is not going anywhere near contracts and subsidies for big banks," he said.
That's not surprising, he added, since former bankers like Robert Steel work for the mayor.
The May 12 Coalition's report also calls for ending subsidies for banks that have not lived up to job-creation promises, and for an extension of the state's so-called millionaire's tax.