New York ‘Fed’ bails out business while Mayor announces budget cuts

Posted March 15, 2008

Friday it was announced that New York State government’s bank, the Federal Reserve Bank of New York, will bail out Wall Street big-shot bankers at Bear Stearns. Perhaps fittingly, Lee Bollinger, the Columbia University President who’s behind one of the biggest land-grabs in the city, is on the Board of Directors of this bank.

Meanwhile, foreclosures on small homeowners continue to rise. City Councilmember from Queens, James Sanders, noted the inaction of government on every level, saying that the federal, state and city legislatures stood by as families were victimized. “The basic problem,” he said, “is that people have mortgages that (were) predatory, so even if you gave them a month to work it out with the bank, studies have shown that banks are not renegotiating with people.”

Last week, Mayor Bloomberg announced that working New Yorkers will have to swallow another round of tax cuts. This $500 million in cuts is on top of the $800 million in cuts already proposed for next year. The cuts will reduce services for every city agency!

“The cuts he proposed in the preliminary budget would already reduce summer jobs for youth, it would cut back on libraries and library hours,” said Doug Turetsky of NYC’s Independent Budget Office. “You’re seeing principals talking about cutting back on after school programs, on being able to buy supplies for classrooms and training for teachers and various other things.”

Unlike Bear Stearns’ bankers, the rest of us depend on these services. Wealthy neighborhoods have resident or business associations that pay for private security and sanitation services (or welfare recipients are forced to do the work there for free). Its a win-win situation for them, reducing the effects of budget cuts on them and also undermining the City’s unions (whose members live in neighborhoods that don’t get the services).

Keep in mind, however, that in fiscal year 2007, the City gave $2.5 billion in tax breaks to landlords and corporations! This can be compared to the $700 million in breaks to individuals, but even this primarily went to wealthy condo and co-op owners downtown with tax lawyers, rather than the small homeowners in the outer boroughs that now face foreclosures.

Its nothing new, and certainly not surprising in the present situation, but of course that doesn’t keep it from hurting.