Question: How are financial markets evolving?
Dan Doctoroff: What’s been very interesting through this period, we all read about the massive collapses or of the major firms like AIG or Merrill Lynch merging into Bank of America or Lehman Brothers or Bear Sterns and those are all bad things but what we tend to miss and what we see through our customer base is just how dynamic the financial system really is. We have added in the last 6 months, 1,800 new firms as customers, many of those didn’t even exist 6 months ago, many of them are people who are either laid off from a firm or decided to leave and do something more entrepreneurially, setting up shop, just like Mike Bloomberg did by the way 27 years ago when he was fired by Salomon Brothers, a firm that no longer exists in its current form.
And that’s happening everywhere and it’s just not startups, it’s smaller and mid-sized broker dealers in the United States and around the world who weren’t so affected by the credit crisis that we’re experiencing, who are seizing the opportunity to pick up talent that they couldn’t otherwise have been able to bring on board, we’re seeing banks around the world, also who are less affected, devising new strategies and moving into other things.
So this really is a very dynamic system that we don’t necessarily recognize, we see it with our customers and that’s not going to stop and in fact, if you look back in history, you’ll see that it’s been the same way every single time we’ve been through one of these things. And we’ve been through probably 10 before.
Question: What is the future of banking in New York?
Dan Doctoroff: I think that’s already happening, we watched the demise… we watched the demise of Lehman Brothers but what we focused on a little bit less is the rise of Barkley’s right? Which bought the Lehman Brothers, they’ve now become a New York giant. They’re headquarted in New York and in London but they’re a New York giant.
And that’s part of the dynamism of the financial system, Bank of America isn’t in the same form as it was before neither is Merrill Lynch but, you know, Bank of America just building massive headquarters in Bryant Park and now, they’re going to need probably more space in New York. So I see it as part of an evolution that is ongoing, you know, when Mayor Bloomberg was elected and asked me to join him back in early 2002, we stepped back and we said, “Look, we’re a cyclical city.”
At the time, New York was reeling from that combust as well as 9-11 both psychologically but also financially and we said, “Look, we got to understand the cycles of financial history.” So we actually went back and looked at the previous 10 financial panics, busts or crashes and we discovered remarkable similarities.
One was that everybody said the same thing about everyone of them about the future of New York, the future of the financial system, about regulation every single time and what you saw is New York always came back, the Wall Street model fundamentally emerged every time, but the Great Depression, relatively unscathed, the regulation was less severe than people had felt at the depth of the crisis.
But most importantly we saw was the system constantly regenerate itself and it’s in the process of doing that right now.
Recorded April 30, 2009.