TO READ THE REPORT: GO TO WWW.NYC.GOV

Warning that New York’s status as the world’s financial capital is in jeopardy, Mayor Bloomberg and Senator Schumer today will recommend ways to stop the loss of finance jobs here and to ensure Wall Street’s dominance in the global business market.

Messrs. Bloomberg and Schumer will release a report that calls for legislative and regulatory actions to make the American financial markets more attractive to investors increasingly looking to places like London, Hong Kong, Dubai, and Tokyo instead of New York.

The report is based on research by the consulting firm McKinsey & Company, which was hired by the city’s Economic Development Corporation. It found that America stands to lose between 4% and 7% of its share of the global financial market if lawmakers here do not take action soon to improve the business environment. To illustrate the urgency, it points out that the number of people working in the financial service industry in London grew by 4.3% between 2002 and 2005, but fell in New York by 0.7% during the same period.

“The report contains a chilling fact that if we do nothing, within ten years while we will remain a leading regional financial center; we will no longer be the financial capital of the world,” Messrs. Bloomberg and Schumer write in the opening letter of the 134-page document. “We must take a cold, hard look at the industry.”

Messrs. Bloomberg and Schumer, who first teamed up on the subject in November when they co-authored an opinion piece in the Wall Street Journal, are now calling on Congress to consider a number of actions.

The recommendations include capping punitive damages in securities lawsuits, increasing the number of visas for skilled immigrants, and recognizing international accounting standards so that foreign companies don’t have to comply with two sets of standards.

Their report also says instructions for complying with the post-Enron Sarbanes-Oxley Act need to be clearer and calls on the federal government to revise guidelines for the so-called “Section 404,” which has emerged as the most controversial part of the law regulating publicly traded companies. Many American and foreign businesses have viewed Section 404 as prohibitively expensive and burdensome for doing business here.

The report zeroes in on easing the regulatory environment, tamping down the litigious business atmosphere, and making regulations easier to comply with.

It notes that in Britain there is just one entity dictating regulations, while navigating regulations here is far more cumbersome. It also says that that legal realities in Britain make for far fewer frivolous lawsuits. America logged $10 billion in class action settlements in 2005, a record that some say is scaring away foreign investment here.

Senior staffers for the senator and mayor — who briefed reporters yesterday on the McKinsey report yesterday on the condition that the report was not discussed with anyone until today — said that if the actions outlined are implemented America’s financial service sector could add between $15 billion and $30 billion in incremental revenue in 2011. That translates into 30,000 to 60,000 jobs.

In a statement, Mr. Schumer said: “The last thing that New York and the country for that matter need, is to wake up one morning and find we are no longer the financial capital of the world. This report shows that could happen not just for IPO’s, but for all financial services, all too easily and all too soon. We must take measures outlined in the report now to avoid the possibility of that happening.” Mr. Bloomberg noted that the financial service industry is vital to New York’s international standing.

“We’ve outlined a range of practical yet innovative steps to ensure the 21st century is just as bright,” he said. “This one of many challenges to our long-term health and stability that requires we move beyond partisanship to find solutions.”

The recommendations in the report come as both Messrs. Schumer and Bloomberg are at the height of their political game. Mr. Schumer became one of the most powerful members of the Senate this month after orchestrating the Democratic takeover of the chamber, while Mr. Bloomberg is being named as a possible presidential candidate for 2008.

As a result, the two lawmakers will likely command a visible platform for getting their regulatory and tort reform recommendations heard.

The report — the result of interviews and surveys with CEOs, business executives, consumers groups, and market research — also suggests providing an exemption to certain parts of Sarbanes-Oxley for foreign companies that already comply with regulations in their home countries that are approved by the Securities & Exchange Commission on the condition that the companies disclose the arrangement. And, it says separate requirements for small public companies, which have felt the brunt of the compliance costs, should be considered.

Messrs. Schumer and Bloomberg note that New York is still the world leader, but that as the global financial market expands, other international cities are gaining ground. Governor Spitzer has been skeptical of efforts to reduce the burden of Sarbanes-Oxley.

Recommendations for the City’s Finance Industry

1. Provide companies with clearer guidelines for complying with the post-Enron era Sarbanes-Oxley Act as a way to reduce their financial burdens.

2. Cap punitive damages on securities litigation.

3. Raise the cap on the number of visas available to skilled foreign workers.

4. Consider recognizing International Financial Reporting Standards.

5. Implement Basel II Capital Accords, an international agreement on capital requirements for banks.

6. Have Congress create a commission to study the country’s financial competitiveness.

7. Create a group in New York comprised of public and private sector representatives to serve as a liaison between the city and the financial services industry.

TO READ THE REPORT: GO TO WWW.NYC.GOV