On the revolving door between Wall St. and the New York State government

Last week I wrote about NY Governor Cuomo’s new hires to run StartUp NY, the new program creating tax-free zones around SUNY campuses for businesses willing to relocate, and their ties to Wall St.  According to Cuomo’s press release, Leslie Whatley, StartUp NY’s new executive vice president, will be employed by the SUNY Research Foundation and Empire State Development will cover half of her annual salary.

It turns out Cuomo’s additions to these state agencies, Whatley and economic development advisor John Mack, won’t be the only ones among their new colleagues with roots on Wall Street.

Empire State Development’s audit director Thomas Brennan has spent 30 years in the audit field, including eleven with JP Morgan Chase, where he eventually became audit vice president.

Cuomo recently named Gerardo Russo as vice president of communications at ESD.  Russo hasn’t worked on Wall St, but he was a close aide to NYC Mayor Bloomberg, serving as his senior policy advisor and previously as his deputy press secretary, and there’s no question that Bloomberg and Wall St. are tight.

ESD director Derrick Cephas is a partner at Weil, Gotshal & Manges LLP.  He heads the firm’s Financial Institutions Regulatory practice group, counseling banks on matters related to Dodd-Frank and New York Banking Law.  He was previously president and CEO of Amalgamated Bank, a banking and corporate law partner at another firm, and a director for Merrill Lynch and for D.E. Shaw & Co.

The SUNY Research Foundation’s CFO Paul Kutey was previously CFO of the Dormitory Authority of NY.  Before that he worked in finance, as an executive with Ayco, a Goldman Sachs company that provides financial counseling services to executives, and First Albany Capital, an investment bank now merged with Gleacher & Company.

Three Foundation directors, Oscar Anderson, Patricia Caldwell, and Donald Siegel, have ties to Wall St. Anderson is managing director at CVC Credit Partners, an investment management firm, and previously was an executive at Wachovia Securities and CIBC World Markets. Caldwell is a founding partner of investment banking firm Gordian Group LLC and previously worked for 13 years at Citibank, eventually founding the Corporate Finance and Analysis department there.  Siegel is currently the Dean of the SUNY Albany Business School, but has served as an advisor to Chase, Morgan Staney, Goldman Sachs and the Securities Industry Association.

I commented last week on the tax avoidance strategies of Morgan Stanley and other Wall St. firms complementing StartUp NY’s tax-free focus.  The program’s primary mission is to create jobs, however, and unfortunately Wall St’s record with job creation may not be as solid.  Analyst Meredith Whitney predicts Wall St. will cut 15% of its jobs over the next 18 months. JPMorgan Chase, Citigroup, Bank of America and HSBC already announced over 10,000 layoffs each.  The NYS Comptroller’s office estimates that Wall St. lost about 28,000 jobs during the 2008 financial crisis and has only managed to add back less than half that many jobs since the recovery began.

Here’s hoping the companies courted by StartUp NY can do better.