January 19, 2009

The foundations of New York's banking industry were rocked last week as the financial crisis entered a nasty new phase, threatening to spread more pain throughout the city's already beleaguered economy.Citigroup's staggering $8.2 billion fourth-quarter loss and its planned breakup, plus news of Bank of America's $20 billion federal bailout, signaled that the crisis is nowhere near an end.

Even stalwart J.P. Morgan Chase posted what it called “very disappointing” fourth-quarter results—including a $2.4 billion loss in its investment bank division, and profits that were 76% below year-earlier levels.“It's the kind of news that underscores why we said before that 'chances are things could get even worse,' “ says Doug Turetsky, chief of staff of the Independent Budget Office, which just two weeks ago predicted that the city would lose 243,000 jobs through 2010.