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Wall Street’s Tremors Leave Harlem Shaken

Resource type: News

The New York Times |

by TIMOTHY WILLIAMS Before its economic turnaround in recent years, Harlem was a case study in disinvestment. Banks were unwilling to make mortgage loans or to open branches, national chain stores could not be lured uptown, city services lagged and the neighborhood became economically isolated from the rest of Manhattan. This has given way in the past decade to a resurgence, as national chains like Starbucks and American Apparel have moved to 125th Street and housing prices have steadily risen. But the collapse of financial institutions like Washington Mutual Savings Bank, Bear Stearns and Lehman Brothers has left Harlem facing a double loss: The disappearance of companies that helped propel the resurgence will not only make it immediately more difficult for business people to get loans and mortgages or for developers to build large commercial projects, but will also lead to the loss of millions of dollars in charitable contributions from those same companies. That will affect everything from children’s health and adult literacy to the Apollo Theater’s famed amateur night. The effect in Harlem of these companies’ failure is an example of the long — and in some cases, unexpected — reach of Wall Street across the city, even in neighborhoods with high poverty rates, and where relatively few people work as stockbrokers or investment bankers. ”People talk about Wall Street greed, but one of the things many people don’t understand is that there are a lot of organizations that have been the recipient of largess from the same Wall Street,” said Geoffrey Canada, president and chief executive of Harlem Children’s Zone, one of the neighborhood’s largest private, nonprofit groups. ”Their absence leaves us scrambling to replace what has been a significant amount of support.” The relationships between Harlem and the companies ranged from the personal — 240 Lehman Brothers employees helped build a six-unit apartment building and tutored children in mathematics each Saturday — to the symbolic: Washington Mutual had its name on the marquee of the Apollo as the primary sponsor of amateur night. Then there is the strictly financial: Bear Stearns provided critical funds for the $85 million Harlem Center, a retail and office complex on 125th Street that includes, among other businesses, a Washington Mutual branch. The tight credit market will very likely have other consequences in Harlem as well, observers said, most significantly a slowdown in economic development, which could moderate the neighborhood’s rapid gentrification. ”One of the factors that led to the changes was high housing prices in the rest of the city, which pushed people who would not have otherwise moved to Harlem into Harlem,” said Lance Freeman, an urban planning professor at Columbia and the author of ”There Goes the ‘Hood,” a book on gentrification in Harlem and Clinton Hill in Brooklyn. ”So if housing prices in other parts of the city stop rising, that could reverse or stall some aspects of the cycle of change.” Much of that change during the past five years has been the result of millions of dollars in private investment, some by Wall Street companies. In recent years, so many banks sprouted up along 125th Street — more than 15 — that the city approved a zoning law this year that limits banks there. That legislation will also allow for high-rise office towers and some 2,100 new market-rate condominiums to be built on 125th, Harlem’s main artery, effectively transforming the predominantly low-rise avenue. Representatives from Lehman Brothers, Bear Stearns, Washington Mutual, Merrill Lynch and A.I.G. — institutions that have foundered in various ways in recent months — have not returned calls seeking comment or have said it was too early to determine their investment and philanthropic strategies in Harlem. Business owners in the neighborhood, however, are worried. Lloyd Williams, president and chief executive of the Greater Harlem Chamber of Commerce, listed several troubling signs: an already high local unemployment rate is climbing, seasonal jobs with the Postal Service and department stores have not materialized, credit for small businesses has all but dried up, and construction and rehab work on brownstones has slowed considerably. The other major concern is the loss of millions of dollars each year in charitable giving from the financial industry to community organizations, including schools and hospitals. W. Franc Perry, chairman of Community Board 10, which covers central Harlem, said many of the grants came only after years of putting pressure on the companies. ”We have held these companies’ feet to the fire, told them, ‘If you want our dollars, you’ve got to help us out,’ and they’ve been helping,” Mr. Perry said. ”Now, this is all so new. There are so many unanswered questions, including whether they will continue to invest in Harlem.” Among the organizations that have benefited the most in recent years is Harlem Children’s Zone, which runs a variety of programs focused on improving the lives of children in the neighborhood. Among its contributors have been A.I.G. and Lehman Brothers, which had pledged $3 million before its collapse last month. The status of the Lehman aid is unclear, but Mr. Canada, the nonprofit group’s president, said he might need to cut back. The Apollo has been another favored recipient of Wall Street aid. Merrill Lynch underwrote tours for schoolchildren. Nadja Fidelia, a managing director at Lehman Brothers, became a member of the Apollo’s board of directors. Lehman had pledged $1 million to the Apollo’s education and outreach initiative. This year, Washington Mutual became the primary sponsor of the theater’s 74-year-old talent contest when it was renamed WaMu’s Apollo Amateur Night. An Apollo spokeswoman declined to comment on the bank’s sponsorship or the future of the theater’s educational programs, which include literacy training and free nights out for poor families. JPMorgan Chase, which bought Washington Mutual and Bear Stearns recently, has been active in Harlem philanthropy. It now inherits a portfolio that includes, among other things, an after-school squash and tutoring program started by Bear Stearns; a pledge by Washington Mutual to establish home loan centers in underserved communities like Harlem; and Washington Mutual’s sponsorships of several neighborhood cultural institutions, including the annual Harlem Week celebration and the Dance Theater of Harlem. A spokeswoman for JPMorgan Chase would not comment about the bank’s plans for the future. The unusual confluence of Harlem and Wall Street might best be represented by a nonprofit lacrosse organization called CityLAX, whose board includes members of Lehman Brothers, Merrill Lynch and Bear Stearns. Since 2005, the group, heavily supported by financial industry employees who grew up playing the game, has persuaded the city’s Department of Education to start lacrosse teams around the city, including in two Harlem public high schools, where most students had never heard of the sport. The project is jointly financed: funds for equipment, transportation and playing fields comes from the group, and the coaches are paid by the school system. But since the failures of Lehman, Merrill and Bear, the future of the programs, at A. Philip Randolph Campus High School and Frederick Douglass Academy, are uncertain. ”Our work is vulnerable,” said Mathew J. Levine, president and chief executive of CityLAX. ”A lot of our kids are not the elite athletes in the school, but this is a chance for them to play, so we’re pulling kids from the margins who would not necessarily be involved in an organized athletic activity. And we think that’s good.”

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financial crisis, Harlem Children’s Zone, recession