You don't have to live on Wall Street to be a Wall Street player.
Even as passionate calls to rebuild New York's financial district rang out after Tuesday's tragedy at the World Trade Center, the losses of the past few days put Wall Street at risk of being diminished as a world financial center.
For years, financial firms have expanded operations outside lower Manhattan because of high taxes and real estate costs. Everything from insurance liability concerns to computer technology encourage that trend away from Wall Street, too.
Now, with more than 10 million square feet of prime real estate wiped out and the prospect of a long and costly rebuilding process ahead, decentralization of the financial sector could be moving faster than ever.
With so much real estate gone, decentralization is a given, said James Tyree, chief executive of Chicago's Mesirow Financial. "It won't be very soon--if ever-- that everything comes back to that area."
As a practical matter, many firms simply must move out of lower Manhattan to keep operations going
In the immediate aftermath of Tuesday's attack, financial firms were scrambling to lease space in Connecticut, New Jersey and outlying New York locations.
Financial powerhouse Merrill Lynch, for instance, is relocating its 9,000 Manhattan workers to existing company facilities in New Jersey, as well as to other locations away from the World Trade Center, as a temporary measure. Merrill Lynch sites around the globe are picking up some New York work.
Other firms, at least temporarily, shifted functions to Chicago, Philadelphia and other regional centers, or even farther away.
Chicago real estate sources say Citigroup might be moving trading operations from New York to Chicago, though no one from the company could be reached to comment on the possible move last week.
Already, futures powerhouse Refco has moved to a backup facility in New Jersey, sending the bulk of its business through its Chicago office.
"At this point we haven't had time to determine whether or not we move the headquarters back to Chicago or elsewhere," said Joe Murphy, Refco's chief executive. "But are people talking about it, here and at other companies? Yes."
Some companies--even financial giants--never needed New York to become a powerhouse in today's technologically linked business world.
Bank of America Chairman Ken Lewis spoke on national television Friday about reconstructing New York's vital financial services core, including its own New York offices, but Bank of America headquarters is in Charlotte, N.C.
Charles Schwab built a discount investing powerhouse from a San Francisco base, largely on a marketing campaign that emphasized the firm's separateness from the clubby world of Wall Street.
No one in Chicago's investment circles is ready to talk about making a pitch for New York's business, but clearly the city stands to gain if such a need for diversification comes about, industry sources said.
If New York firms decided to move some emergency or redundant functions to regional centers, "It could benefit Chicago in a big way," said Jon Najarian, a veteran Chicago options trader.
Longtime securities industry leader Jack Wing agrees that Chicago and other regional financial centers could pick up some back-office functions as firms move to diversify their operations. But he said last week he expects no grand exodus away from the New York area, but rather a spreading out of operations across the region.
Chicago Stock Exchange Chairman A.D. Frazier agreed, saying: "I'm certain companies will take a look at backups and alliances, but I don't for a moment think the [securities industry] will consider abandoning New York as the general locus."
New Yorkers are determined to keep their city the center of the world financial system.
Mesirow's Tyree, who rode out the attack in a nearby hotel at 60 Wall Street, noted, "From what I saw there, I'd say New York's desire to rebuild will be very strong."
Henry Higdon, a longtime Wall Street recruiter, said that while it may take a long time to rebuild, the concentrated talent pool in New York, from broker-dealers to private equity specialists and others, will keep the business close at hand.
For everyone in the securities business, though, the fate of Cantor Fitzgerald in Tuesday's attack is likely to be chilling.
The bond-trading firm had half its approximately 2,000 employees on four floors of the World Trade Center, and suffered terrible losses--some 700 are believed to have perished.
When the bond markets reopened Thursday, the firm kept operating through offices in New Jersey and London, but the disaster pointed to a dilemma for corporate chiefs as they move forward: Is the synergy that arises from keeping top people in one location worth it from a security standpoint?
"Will companies be less likely to put large numbers of employees in one place? Yes, I think so," said Jack Sandner, chairman emeritus of the Chicago Mercantile Exchange. "I think absolutely it will be a question on every board agenda whether or not to put the whole ball of wax in one building."
As Tyree puts it: "The days of wanting to be on the highest floors and in the most visible buildings are over."
Firms mull moving operations from New York
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