Corporate Welfare for Wall Street
Richard A. Grasso, chairman and chief executive officer of the New York Stock Exchange and his merry band of traders must believe that Robin Hood had it all wrong. Grasso and company want to take from the working families, small business people and the other taxpayers of New York and give to the wealthy investors on Wall Street that make up the New York Stock Exchange (NYSE).
The 3,000 plus companies listed on the NYSE have a total market capitalization of more than $15 trillion. The NYSE limits its membership to 1,366 individuals or firms and the price for membership in this exclusive group fluctuates based on demand. Today’s asking price for membership in this capitalist club is only $1,700,000. Despite the corporate and individual largess of the NYSE members, they want a $1.1 billion subsidy from New York State’s big and little taxpayers.
One might ask why free market boosters like New York State Governor George Pataki and New York City Mayor Rudolph Giuliani feel compelled to give the NYSE a gargantuan amount of corporate welfare. Well, the NYSE indicated it might move to New Jersey – that’s right, New Jersey! The Mayor and Governor surrendered to this “laughable bluff” in the words of one veteran stock trader and offered a pile of taxpayer cash, a big parcel of land, and other goodies like tax breaks and cheap energy.
Don’t worry. The Mayor and the Governor did a swell job representing the taxpayer. They offered to purchase and demolish an entire city block at an estimated cost to taxpayers of $450 million, provide $480 million in outright grants to build a new 600,000 square-foot trading complex, and provide $160 million in tax breaks andlow-cost electricity.
So New York gets to house the new NYSE for $1.1 billion. According to Good Jobs New York, a joint project of Good Jobs First and the Fiscal Policy Institute that tracks the use of corporate subsidies in New York City, this is by far the largest and most dubious corporate subsidy in New York State history.
The day after this proposed giveaway was announced back in 1998 former State Senator Franz Leichter said, “The mayor is playing Santa Claus with the city’s treasury. The fact is, the city is paying an inordinate amount on the dubious proposition that the stock exchange would have moved to Jersey City. And all this has been done without any public debate.” The entire process of moving tax dollars to the Wall Street Welfare Kings has given to new meaning to the word “chutzpah”.
Eighteen months after the deal was publicly announced, following a series of back room negotiations, Governor Pataki employed a procedural sleight of hand to rush the bill through both the Senate and the Assembly on the second to last day of the legislative session.
The Governor’s “Message of Necessity” required Senators and Assembly members to vote on the legislation immediately, and waived the New York State Constitution’s requirement that no bill be passed or become a law unless it is printed and on the desks of the members, in its final form, at least three calendar legislative days prior to its final passage. But the Governor’s message of “necessity” simply said the bill was necessary to authorize the state’s development corporations to provide support to expand the NYSE – no emergencies, no explanation of why the legislation was being introduced so late, no grand theories, just bald circumvention of the democratic process.
The bill passed the Senate on June 22, 2000, the same day it was introduced, and on the very next day the Assembly followed suit. The legislators in each house approved this legislation without a word of debate or a single voice of dissent. Many were probably unaware of the cost. Amazingly, the bill was not signed by the Governor until December 8, 2000. So much for the urgent need to move the bill through the legislature on an expedited schedule.
Some have questioned why the corporate sector doesn’t bear the costs of this project, particularly given all the capitalist free market boosterism on Wall Street. Alice Meaker, who directs Good Jobs New York – a project that promotes responsible use of New York State’s economic development subsidies – said, “The securities industry in New York City, which is dominated by NYSE firms, paid out bonuses of nearly $12 billion in 1999. With a fraction of those bonuses, these firms could easily finance the new facility themselves.” Ms. Meaker also notes that the $1.1 billion being offered to the NYSE “means much less for investments in public education, transportation, affordable housing, and job training.”
New York taxpayers Unite! It is time to send a message to the greedy NYSE titans, and to cowardly public officials who lack the gumption to protect your interests. Conservative and liberal groups can band together and say no to this wasteful taxpayer giveaway to the Wall Street moguls.
For more information on how you can join this fight visit the Good Jobs New York web page. The URL is: http://www.goodjobsny.org. You can also write to the Corporate Accountability Research Group, P.O. Box 19312, Washington, D.C., 20036.