New York steels for effects of Wall Street crisis

NEW YORK -- A city whose economic fortunes are closely tied to Wall Street's ups and downs braced Monday for fallout from the collapse of one financial pillar and the sale and likely restructuring of another.

Economists and city officials said the nose dives could lead to the loss of thousands of jobs and affect the livelihood of everyone from real estate developers to limousine drivers.

Financial experts were reluctant to speculate how many would be out of work after Lehman Bros. Holdings filed for bankruptcy protection and brokerage firm Merrill Lynchmer was sold to Bank of America bac.

New Jersey, Connecticut and suburban New York counties also could take a hit, because thousands of Wall Street executives and workers live there.

Barbara Byrne Denham, chief economist for Eastern Consolidated, a New York City-based commercial real estate firm, said the city already has lost about 10,000 financial-sector jobs since September 2007 and predicted, "We'll definitely lose at least 10,000 to 20,000 more before we see the end."

New York Mayor Michael Bloomberg cautioned that while job losses will certainly rise, the city has taken steps to minimize their impact.

"As sobering as the economic news is, the city is as well positioned as it's ever been to handle turmoil on Wall Street," Bloomberg said. He said the city has set aside surpluses and beefed up other industries such as tourism and the biosciences.

Still, the salaries and hefty bonuses traditionally earned on Wall Street pump cash into everything from restaurants to high-end co-ops and hired-car services and have a larger impact on other local businesses and tax revenue than any other industry.

"This multiplier effect will have a serious impact not only on the financial-sector employees who lose jobs but also on many New York families who are indirectly affected by those job losses," said Bloomberg, who noted that one job on Wall Street generally creates at least two others in the city.

The city has weathered other financial crises. Denham said that 32,000 financial jobs disappeared in the two years after the 9/11 attacks. "9/11 … was far more critical to the city," Denham said.