Alliance for Downtown New York
Association for a Better New York
Real Estate Board of New York

October 21, 2002

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549-0609
Via E-Mail: rule-comments@sec.gov

Re: File No. S7-32-02

We appreciate the opportunity to comment on the Draft White Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System. Our organizations, the Alliance for Downtown New York, the Association for a Better New York, and the Real Estate Board of New York, represent the real estate, commercial and economic interests of the City of New York, and share a common commitment to support and further the economy of the city and its business interests.

We understand and endorse your concerns as the regulatory agencies to assure that contingency plans exist for the continuity of financial operations in the event of a major regional event, such as we all experienced in New York City and in Washington D.C. on September 11, 2001. The resilience and emergency resources of the entire business and residential communities in New York City were pivotal to restoring the city's infrastructure and enabling the city's financial functions to recover rapidly from the disruptions of the terrorist attack.

Our concern is to insure that the present and future concentration of financial services activity in Manhattan and New York City is not adversely affected either by the explicit guidance to provide redundant systems, or implicitly by an implementation of these practices that would divide primary sites or promote decentralization. Therefore:

  • We urge that the Sound Practices paper, when finalized, state specifically and not just in Footnote 4 that the intent and the implementation of the resulting guidelines for out-of-region recovery site(s) is not to dilute or disperse the location of existing or future financial headquarters or that of existing or future "back office" processing facilities that are located in the central city.

  • In support of this comment, and because of the scope and importance of the financial industry to the economy of New York City, we recommend that your agencies prepare an economic impact analysis of the likely effect that the proposed Sound Practices would have on the city's economy. This study should also examine whether diluting the current concentration of financial services (and the attendant efficiencies) would have a negative impact on the national economy.

  • We would suggest that a set of alternative siting options, with estimates of the varying economic impact on major financial centers, be substituted for the more general guidance that is suggested in the draft document.

  • Such an economic impact study could also help clarify the size, scope, and expected staff configuration required at the recommended remote recovery sites.

In addition, we urge that the White Paper clarify the guidelines covering the present and future concentration of major back office processing facilities, as presently configured within a metropolitan area, and in our case, the five boroughs of New York City. Our understanding is that these concentrations would not be adversely affected by the guidelines, and that your sound practices would encourage installation of additional or tertiary recovery facilities, and not displacement of existing facilities. New York City's boroughs also provide a reliable and extensive transportation network, labor pools, and emergency services.

We also recommend that the White Paper clarify the circumstances under which existing branch or processing facilities located in other states or countries would, or could, suffice as backup recovery sites.

We question whether the proposed distance of 200-300 miles for these recovery sites would be necessary for many potential emergency situations. In many cases, even for a metropolitan area as large as for New York, a 50-60 mile radius would appear to offer sufficient distance to meet the Sound Practices, since the four states that fall within this radius offer the conditions of alternate utility grids, water systems, contained local labor markets, and local transportation systems.

Finally, we agree with your stated concerns for the adequacy of telecommunications systems, and recommend that the guidelines offer sufficient encouragement for alternate carrier service for both primary concentration areas and remote recovery areas, as well as for continued technological improvement for data transmission. We believe that the emphasis needs to be for full network redundancy, and not just for carrier redundancy.

Carl Weisbrod, President
Alliance for Downtown New York
120 Broadway, Suite 3340
New York, NY 10271
Tel. 212-835-2740
E-Mail: cweisbrod@downtownny.com

William Rudin, Chairman
Association for a Better New York
345 Park Avenue
New York NY 10154
Tel. 212- 407-2433
E-Mail: wrudin@rudin.com

Steve Spinola, President
Real Estate Board of New York
570 Lexington Avenue
New York, NY 10022
Tel: 212-616-5229
E-Mail: sspinola@rebny.com