In a report released Wednesday, State Comptroller Alan Hevesi said scandals on Wall Street and in the accounting and energy industries over the last two years were responsible for a $2.9-billion hit to the state’s economy, the Associated Press reported. Hevesi also said the scandals ate into state tax revenues by $1 billion.
With some of the scandal-plagued companies located in New York City, the city bank accounts also suffered a hard slam. Hevesi said New York City lost $260 million in tax revenue and $7 billion from the city public pension system’s value – mostly because of lost jobs and stock value.
On an individual basis, the comptroller estimated that the scandals cost a New Yorker in his or her 50s or 60s more than $10,000 in investments in 401(k) programs or other savings plans . New Yorkers in their 40s lost an average of $8,000.
“New York was hurt particularly hard,” said Hevesi, according to the AP. “When the stock market declines, that hurts the financial markets, a key industry. And every unit of government, the state and every single county, town and village, faced reduced revenues and higher costs.”
He said that calculating the cost is critical to finding ways to enact strong measures to avoid such scandals and subsequent financial collapses, which took commerce and jobs with them. Hevesi determined the state’s cost by taking a fraction of the $35 billion nationwide loss that the Brookings Institution blamed on the scandals in a 2002 report. Hevesi said the state’s economy is about 8.4% of the national economy.