As Wall Street entered its second week of market turmoil and federal lawmakers negotiated the largest bailout in American history, Queens residents struggled to make sense of the changing financial landscape and how it would affect them.
There were no bank panics in Flushing Monday morning, but customers were anxious about the future on a day when the Dow Jones Industrial Average dropped 372 points over uncertainty surrounding the federal rescue plan.
"I think it's scary for me because I have no idea what's happening, really," said Jennifer Ravich, 34. "I'm a nurse, I'm not an accountant or anything. I just don't know about this stuff. So I see everyone going crazy about it and it scares me. I don't know what would happen to my money."
After Lehman Brothers declared bankruptcy, insurance giant AIG accepted an $85 billion government rescue plan and Merrill Lynch sold itself to Bank of America last week, President George W. Bush and U.S. Treasury Secretary Henry Paulson announced a $700 billion plan to buy the bad debts of other banks wracked by the crisis.
Mayor Michael Bloomberg has ordered city agencies to slash a total of $500 million from their 2009 fiscal year budgets by Oct. 8 and suggested increasing property taxes by 7 percent as soon as January 2009.
"This is not going to be a feel-good time," he said at a news conference at Kennedy Airport, noting the City Council would have to approve the tax hike. "You always have to balance giving people services that they want and managing the deficit."
On the state level, Gov. David Paterson was considering calling legislators back to Albany to make further cuts to the budget.
Forest Hills resident Christopher Benson, 46, said he was watching the market fluctuate, but was not worried yet.
"Longer term I guess it worries me more," he said. "The next five, 10, 15 years. What is it going to be like when I retire? Ten years ago, retiring into a depression never crossed my mind."
In southeastern Queens, where many neighborhoods have been devastated by subprime home foreclosures, some worried a loss of faith in the markets would lead to more housing woes.
Marcia Thompson, 38, a bank manager from St. Albans, knows a lot of clients who are being foreclosed or have subprime mortgages.
"People don't know what to do, and it's going to get worse," she said. "A lot of them were scammed."
State Senate Minority Leader Malcolm Smith (D-St. Albans) said the city estimates about 30,000 jobs will likely be lost as the Golden Age of Wall Street ends and the nation's financial industry is restructured. He did not know how many of those laid off would be from Queens.
Smith said he supports the $700 billion bailout.
"I think it would be catastrophic worldwide if we did not," he said, but noted he had concerns about how lawmakers would deal with compensation packages for executives, the foreclosure market and corporate accountability.
City Councilman James Sanders (D-Laurelton) described his district as "the Lower Ninth Ward for the economic tsunami," referring to the New Orleans neighborhood devastated by Hurricane Katrina and the current subprime crisis.
Sanders thought the bailouts would aid the big commercial banks and said more stringent oversight was needed to ensure the crisis does not repeat itself.
"With proper regulation, we should not have this problem," he said.
Anthony Sabino, a St. John's University business law professor, said Queens will be hard hit by both weakness in the housing market and the Wall Street job losses.
"There are people in Queens who work in the financial sector or are dependent on it," he said. "These folks will suffer in terms of job loss. They may be compelled to live out of state and that will hurt the housing market."
But Sabino disagreed that more market regulation would solve anything.
"Government can't do anything and should do nothing," he said. "... Within the frame of capitalism, people with their own money went out and did stupid things. They put billions of dollars in stupid things and they took that risk to stupid levels. It's not for a lack of regulation. ... We can certainly fine-tune the system, but fundamentally the law of Wall Street works."
Reporters Howard Koplowitz, Ivan Pereira, Stephen Stirling contributed to this story.
Reach reporter Jeremy Walsh by e-mail at news@times
©2008 Community News Group
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