ICE not FIRE will propel city’s future economic growth, Spitzer says

Finance, insurance and real estate lose ground to creative, information industries

At this morning’s meeting of the Real Estate Principals Group, former New York Governor Eliot Spitzer bemoaned the state of American political discourse — “this is negative sum politics” — and called for a return to “Glass-Steagall era” banking.

The breakfast meeting, which the group calls “a collegial forum for candid discussion of matters of key importance to investors and senior real estate and finance executives,” was held at Club 101, at 101 Park Avenue, and included guests such as Francis Greenburger, founder of Time Equities, Harry Dublinsky, a former controller for Forest City Ratner and Jeffrey Moerdler, head of the real estate practice at Mintz Levin.

Spitzer blamed a stratification of wealth for “increasingly vitriolic politics,” which he said distract us from “making ourselves competitive in a way that will permit long-term growth.” He cited a lack of cooperation between the parties as evidence of the “negative sum” approach to politics that has made meaningful reform in the banking sector elusive.

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But in New York, as a “global city,” we can still expect our economy and therefore our real estate sector to thrive, the former New York State Attorney General said. Already the main growth sectors in New York City have become ICE, not FIRE, he said. The ICE sectors — which he described as “intellectual, cultural and educational industries” — will be what drives the city’s future growth, if we can sustain our recovery from the Lehman debacle. Meanwhile, FIRE — finance, insurance and real estate — is on its way out, as The Real Deal has previously reported.

And what would hasten our recovery? Spitzer did not mince words. He argued for an increase in financial regulation — even as he admitted that regulation can slow business — and an end to the thinking wherein “what used to be called a conflict of interest is now called a synergy.” He called for the return of the Glass-Steagall Act, the banking legislation that was enacted after the stock market crash and repealed in late 1999.

He also said that banks with Federal Deposit Insurance Corporation and other federal backing should not have hedge funds, and called ratings agencies “a joke.”