New York could Lose Role as Financial Capital

London is set to overtake New York, because of the US vulnerability to litigation and heavy regulation, according to Bloomberg – backed by New York Governor Eliot Spitzer and Senator Charles Schumer.
The report concludes that today's trends, unchecked, would lead to the loss of between $15bn and $30bn in financial services revenues a year by 2011, with related losses of between 30,000 and 60,000 jobs.
As well as suffering from the impact of Sarbanes-Oxley, the report suggests that the United States' market advantage has been eroded by improved overseas markets and more sophisticated technology that have “virtually eliminated” barriers to the international flow of capital. Meanwhile, new barriers to the US competitive position have emerged and are “self imposed”, says the report. These include visa restrictions on overseas workers, preventing the recruitment and retention of skilled staff.
Recommendations in the report concentrate on improving the legal and regulatory environment, with particular attention to accounting rules. IFRS should be recognised for listing purposes without the need for reconciliation, with faster convergence of accounting and auditing standards, says the report. Measures should also be taken to improve the authority of the Securities and Exchange Commission and more should be done to attract international capital and resolve long-term structural issues, with a public private partnership established to further promote New York as a financial services centre.
"Our capital markets and financial services firms will only enjoy continuing growth - growth that our city expects, needs and demands - if we take seriously the challenges from rapidly-expanding competitors in Europe and Asia," said Bloomberg – who is widely expected to run a campaign for the Republican nomination for President.
"The financial markets are a cornerstone of New York State's economy yet, as the study illustrates, we are in danger of losing our pre-eminence as the financial center of the world," said Governor Spitzer, a Democrat. "We must take these recommendations seriously so as to support an economic climate ripe for financial services while continuing efforts to safeguard the market for investors.”