Kathryn Wylde, president of the Partnership for New York City, testified Tuesday before the New York State Assembly Ways & Means Committee that "the next two or three years will be rough going" in New York City's financial services industry.

"We will not see the return of the large, highly leveraged investment banking businesses that generated outsized profits and bonuses. The numbers of people employed in securities will be permanently down, probably by 25-50 percent from a high of 192,000 in 2007," she said.

"Our other core industries - retail and fashion, travel and tourism, and media are just beginning to feel the pain of a global economic downturn," Ms. Wylde continued, adding that "Consumers are not spending, international travelers are staying home, and advertising revenues are drying up. While New York avoided the worst of the housing values crisis, our commercial and residential real estate and construction industries will be hit hard as the falloff in financial services ripples through the economy."

"Despite these challenges," Ms. Wylde said, "our members are generally optimistic about the long-term prospects for New York - assuming all levels of government act in concert with industry leaders to pursue policies that restore consumer and investor confidence and establish a solid platform for economic recovery. The world still looks to Wall Street to establish market trends. New York's brand as a commercial center is highly respected in emerging economies of Asia and other parts of the world. The tri-state Metropolitan Region has the world's largest aggregation of talent in the financial sector. Assuming we can hold onto that talent during a few lean years, our position as a financial center will remain pre-eminent."

"Foreign companies continue to prefer New York as the location for their U.S. operations, currently providing one out of twenty jobs in the city and responsible for 15 percent of our economic growth during the past five years. New York has more professionals in private equity, hedge funds and asset management than any other city in the world - and these are all sectors where future growth is promising," Ms. Wylde declared.

"There is still a need for the federal government to deal with the estimated 10 million homeowners in the country who are stuck in a position with negative equity in their homes and unaffordable mortgage terms. The other immediate need is for a major economic stimulus package, primarily channeled through direct aid to states and localities that are facing huge fiscal deficits. Governor Paterson's efforts to secure federal relief on the Medicaid reimbursement formula is widely supported, as is funding for high tech and other infrastructure projects that are ready-to-go. Tax rebates to consumers are considered among the least useful federal interventions."

As the system is restructured, she continued, "many New York-based institutions are likely to become larger and stronger companies," adding that "A final message that needs to be made loud and clear is that New York's tax burden on business and individuals is already high and a tax increase at this time would be very destructive to attraction and retention of businesses and high end talent. New York should not forget that the markets are global, trading is done electronically, and that New York must remain competitive. Spending reductions, deferrals and alternate sources of revenue - other than taxes -- need to be the way New York State closes its budget gap for the duration of this crisis."