Goldman Sachs seems to be the most recent (and famous) New York investing house to join the exodus from that state for warmer climes, in this case, Florida according to this article spotted and shared by B:
According to the article, the reason for the beginning of this latest exodus are the high taxes in New York state and New York City:
Goldman Sachs employees finally returned to the office this week (for at least part of the work week). But at least some Goldman employees who miss working from the beach, the bank might soon be moving some of its front-office workers from NYC down to sunny Florida, becoming the latest major Wall Street firm to beef up its operations in the Sunshine State.
Goldman will join Carl Icahn, Dan Loeb's Third Point, the private equity giant Apollo and a host of other firms in moving more employees to Florida, a state that, among other perks, has no income tax, according to a report published Monday by Insider. But talk of the bank moving some of its personnel has been circulating since at least late last year.
Per Insider, Goldman "is in the early stages of moving traders and salespeople to Florida," and the leaders of its global markets group have recruited about 100 or so people to move down south, according to sources "with knowledge of the plans."
As I argued in my blog about Texas Governor Abbott's attempt to woo the NASDAQ data center from New York to Dallas, where data centers and traders go, exchanges are not far behind.
But there's another reason mentioned in the article, and I find it very intriguing and important, not the least because "I'm an analogue kind of guy":
The move makes sense considering that one of Goldman's top traders already commutes to New York from Boca Raton. As it happened, having at least one of its top traders in Fla. during the pandemic turned out to be a godsend for the bank, since they were able to meet with clients face-to-face more than six months before bankers in NYC were able to.
Goldman's sales-and-trading operation is led by Ashok Varadhan and Marc Nachmann. While Varadhan lives in New York, Nachmann commutes to New York from a private development in Boca Raton, Florida, according to real-estate records.
Florida has been Nachmann's home for more than 15 years, according to two people with knowledge of his arrangement. During the pandemic, his Florida base meant Nachmann met with clients in person roughly six to eight months before New York reopened, one of the people said.
Insider reports that Goldman's plans for relocating some of its top people to Florida started taking shape even before COVID. It started when one of the top executives in the bank's asset-management arm stated exploring a potential move, just as more buy side firms (and more of the bank's clients) were heading to Florida. When CEO David Solomon caught wind of GSAM's plan, he decided to expand the project and explore moving even more personnel to the famously low-tax state.
In other words, in the high investment world of Goldman Sachs, nothing - absolutely nothing, not profit to loss ratios, not risk assessments, not prospectuses - can replace the man-to-man interaction of being able to look someone else in the eye and "get the measure of the man." And if Florida let's you do it, and New York and Nuttyfornia do not (unless of course you're Nancy Piglosi and need your hair done), then off you go.
All that's well and good.
But I suggest there may be deeper reasons for the exodus, and these reasons should give those states doing the wooing some pause. I suggest it's necessary to view these moves in the context of the growing movements of states, particular on the borders and in the heartland of the USA, to pass various nullification laws, to recognize bullion as legal tender, to start their own bullion depositories, and so on. To give these measures teeth, those states will have to address - at the state level if need be - the laws and financial practices that led to the financial mess than began to grow in the 1990s. If one were Mr. Globaloney, and watching this slow crackup of the USA and the ineffectual federal government, one would want to fasten the claws of financial control around the larger of those states, like Texas, and Florida. It's an old game: when one headquarters becomes no longer feasible, simply move it, and continue to play the same game, from Venice to Amsterdam to London to New York ... to Miami and Dallas...
So my advice to those states: it might be necessary to consider state versions of Glass-Steagall, or compacts among themselves for regional versions thereof... and to consider other means of ensuring the growth of productive capitalism, and not the finance-crony-crapitalism that has been the practice for far too long. One might even want to discuss and debate the idea that, in return for being allowed to conduct business in a particular state without income tax, that a certain percentage of investments go to the creation of manufacturing businesses within that state, and majority equity stakes held by Americans.
Just a thought...
But in the meantime, regardless of what happens, Goldman Sachs' move presages more to come.
See you on the flip side...