When Morgan Stanley and Goldman, Sachs, sought and received permission to transform themselves from investment banks into commercial bank holding companies -- what most of us actually mean by the word "bank" -- it marked "the end of Wall Street as we know it", in the words of former FDIC head William Isaacs. And Wall Street has long been an enormous part of life in the Big Apple -- the engine behind our service industries, real estate market, law firms, even our museums and theatres.
We have lost an entire American industry here. This is no less shocking than if Ford, Chrysler and GM shut their doors within weeks of each other, or announced plans to make asphalt shingle instead of automobiles. Actually, it is more shocking, since the US auto industry has been shriveling for decades, while even a few months ago, these investment bankers still seemed like (in an old phrase) "Masters of the Universe."
Right now, in the midst of it all, nobody knows how severe the local repercussions will get. It is likely that as philanthropic donations taper off, our massive arts institutions -- Lincoln Center, the Metropolitan Museum -- will take a big hit, right up front, buffered only by what we hope are significant endowments. But after that? How many buildings under construction will be abandoned halfway up, as the funding disappears? As the city and state tax bases change, what will happen to our already-ailing mass transit system? Eventually, as public services diminish and the job market constricts, crime will begin to edge back up again.
We're not talking apocalyptic dystopia, mind you. New York was an interesting place to live in the 1930s, and in the 1970s; it will still be an interesting place to live if the money drains out again. But it may be a poorer, dirtier, and more violent place.
All that said, we are a bit concerned by John McCain's apparent lack of economic savvy. Not only does he think the "fundamentals are sound," but he has, just recently, suggested that as president he would "fire" the head of the SEC, something the president does not have the power to do, and apparently confused the SEC with the FEC, or Federal Elections Committee. Oh, and in a single day he reversed course on the AIG bailout, apparently because he didn't understand what it was. It's all a bit unnerving, don't you think?