nb34p01.qxp 8/17/2007 6:39 PM Page 1 TOP STORIES Textbook Digital efforts fall answer to short at magazine NY jobs —Greg David giant Time Inc. on Columbia’s PAGE 2 expansion ® plans Chinese firms list Page 13 on Nasdaq for prestige and access to cash VOL. XXIII, NO. 34 WWW.NEWYORKBUSINESS.COM AUGUST 20-26, 2007 PRICE: $3.00 PAGE 3 MARKET CHAOS HITS HOME Rate talks between hospitals, insurers getting tense Wall Street’s rookies Well is dry PAGE 3 Business owners in for real Queens call for socked by first crisis probe of chronic estate flooding problems Twenty-something SURGE IN FRESH FACES PAGE 25 financiers struggle deals in teeth of the rout; Labor in NYC: UFT Transactions stall, adds members; job fears mounting chart ranks city’s buyers walk away largest unions BY AARON ELSTEIN as lenders pull plug UNION REPORT, PAGE 19 jean-philippe aractingi has never seen anything like this. BY TOM FREDRICKSON Markets plunge,then soar,then BUSINESS LIVES plunge again, not in days or weeks, the credit crunch is paralyzing GOING TO EXTREMES but in minutes and even seconds. the New York real estate market. In recent weeks, three of Wall In the past few weeks,financing Daredevil execs are taking risks; employers Street’s longtime titans—Bear for almost all large commercial and are wary PAGE 31 Stearns, Goldman Sachs and residential projects in the city has Kohlberg Kravis Roberts—have dried up. each seen their reputations sullied. As a result, some property de- Meanwhile, armies of professional velopers and investors are being and amateur investors are bolting forced to abandon deals and are for the exits. losing hundreds of thousands of For scrubs like Mr. Aractingi, a dollars in deposits. Those who are 25-year-old associate trader at closing deals are being forced to BNP Paribas in midtown, the double their down payments and world has suddenly gone haywire, lindström bekka pay significantly higher interest and his once-satisfying days at the bloomberg news rates. office have become grueling “The blood on the streets AT DEADLINE marathons. one has the time or energy to hear find themselves facing something proved that things go down as well “It’s crazy,” says Mr. Aractingi, about other people’s problems. entirely new to them—a full- as up,” says Geoffrey Rice, a senior A REPORT ABOUT THE who notes that when the markets “There is so much stress,” he says. blown market crisis.With no expe- director at CB Richard Ellis/Cap- AVAILABILITY OF BROADBAND go into free fall, all conversation All across Wall Street, analysts, rience of their own to fall back on, ital Markets. “The markets have service in New York City has with colleagues ceases because no traders and bankers in their 20s See WALL STREET on Page 8 See REAL ESTATE on Page 8 been delayed. Last year, Chicago-based Diamond IN THE MARKETS Mortgage fears pinch E*Trade Page 4 EDITORIAL Local leaders must brace for economic fallout Page 12 Management & Technology Consultants was commissioned by the city’s Economic Development Corp. to conduct the study, NY Democrats enjoy $1B helping of pork which was supposed to be completed this summer. It is now scheduled for the fall.The midway through Washington’s an- EDC, which declined to New generation nual appropriations process. discuss what Diamond has learns power of The total disclosed so far—10% turned up so far, asked the firm of the national figure, even though to expand its research. majority; action New York accounts for just 6% of soon shifts to Senate the U.S. population—shows De- THE FOOD BANK FOR NEW YORK mocrats wielding their clout in their CITY has acquired first year of majority rule since 1994. FoodChange Inc., a 27-year- BY ERIK ENGQUIST Local Democrats, reflecting on old nonprofit that provides their new ability to snag so-called emergency meals and financial new york’s delegation in the earmarks, say that the difference is and nutrition education to House, cashing in on Democratic palpable. DIVIDING SPOILS: See AT DEADLINE on Page 2 control of Congress, has amassed “Right off the bat, we noticed Rep. Charles Rangel and Sen. Hillary $1.1 billion in federal budget pork that things began to happen,” says Clinton are in a Rep.José Serrano,D-Bronx,who in position to help fellow January became chairman of an ap- 34 local Democrats. 5 propriations subcommittee, a perch that lets him directly allocate funds. getty images “We recently announced $200 million for the Second Avenue sub- nority party.” He also stuck $50 buy new voting machines. ELECTRONIC EDITION way,” Mr. Serrano says. “I have to million into a supplemental budget “The chairmen of the appropri- tell you, it was less of a pull than [it bill to replace other federal money ations committees are so powerful, NEWSPAPER would have been] being in the mi- that New York lost when it failed to See NY DEMS on Page 9 71486 01068 0 CNYB 08-20-07 A 2 8/17/2007 6:09 PM Page 1 AT DEADLINE Continued from Page 1 Chatwal’s Dream Hotel on West Digitally challenged low-income city residents.The 55th Street. Dream Downtown acquisition boosts Food Bank in is expected to open in fall 2008. its efforts to broaden its offerings to include nutrition THE AMERICAN BAR ASSOCIATION services and will shore up LAST WEEK DENOUNCED Time Inc. past prime? FoodChange, which had a $2.5 mandatory retirement policies million deficit last year.The for law firm partners.The combined nonprofit will have an 413,000-member organization operating budget of about $30 urged firms nationwide to scrap Despite e-push, publisher isn’t growing fast enough million and will be run by Food the age-limiting rules, which Bank president Lucy Cabrera. commonly enforce retirement ages of 65 or 70, on the basis ANN MOORE’S tenure BY MATTHEW FLAMM as chief executive of LIMEWIRE, A MUSIC FILE- that they violate age Time Inc. has been SHARING SITE THAT IS BEING sued discrimination laws. time magazine continues to lose ad pages despite marked by an up- by the recording industry, will Approximately 57% of law firms its radical re-engineering of five months ago, and and-down quarterly start selling music. Last week, with more than 100 lawyers performance. the Manhattan-based company have a mandatory retirement Fortune, Money and Business 2.0 have suffered said it will offer users monthly age, according to the New York double-digit advertising slides in the first half. But subscriptions or the chance to State Bar Association. the decline of some of Time Inc.’s core print buy individual tunes. IRIS properties is an old story at the company. Distribution and Nettwerk FOR THE FIRST TIME IN ITS Productions are the first labels HISTORY, MACY’S IN Herald A more troubling issue is that even with traffic to allow LimeWire to sell their Square will turn over all 39 of its increasing at key Web sites and an all-hands- music catalogs. Last year, major famous storefront windows to on-deck approach to reinventing itself as a record labels sued LimeWire for one product line: the Martha alleged copyright infringement Stewart Collection.The line of multiplatform content company, ad and are seeking $150,000 for housewares will be launched on revenue at the No. 1 magazine every song that LimeWire Sept 10.The window displays, publisher grew only 1% in the distributed.The suit is ongoing. which are already being second quarter. For a business under installed, will stay in place for THE PROPERTY AT 446 W. 17TH two weeks and feature awnings pressure, that’s not good enough. ST., OWNED BY The Covenant in Martha Stewart’s signature Time Inc. Chief Executive Ann House, was recently bought by blue instead of Macy’s Moore has staked her legacy on hotelier Vikram Chatwal, who traditional green. transforming the enterprise into will convert the former rooming facility for homeless children PACE UNIVERSITY IS FACING a 21st century publisher and into a boutique hotel called MORE LABOR HEAT, this time making it the profit machine Dream Downtown. from the New York State United that it was when she took the Restaurateur Greg Brier will Teachers union. On Thursday, create a 24-hour hotel café and a members rallied at the Somerset, reins five years ago. 4,000-square-foot nightclub on N.J., offices of Pace Chairman But Time Inc. got a late start the roof of the 15-story building. Aniello Bianco to demand fair out of the digital gate. Ms. Moore’s The partners teamed up on wages and better working critics complain that she wasted other projects, including highly conditions for staff and adjunct rated Amalia restaurant, which faculty. Pace officials were resources launching the ill-fated Life opened this year next to Mr. unavailable for comment. I newspaper supplement and the low- margin women’s title All You when she getty images CORRECTIONS should have been focused on the Web. An item in the Aug. 13 Real Estate Deals column about the Fulton Street Transit Center was mistakenly accompanied by an artist’s rendering of the World Trade Center Transportation Hub. Her defenders argue that she was See DIGITALLY on Page 10 THIS WEEK IN CRAIN’S GREG DAVID ------------------------------------13 FAO using Web to calm THE INSIDER------------------------------------14 WEEK IN REVIEW -----------------------16 REAL ESTATE DEALS--------------18 buyers about toy recalls REPORT: UNIONS ----------------------19 ter,” says Edward Schmults, chief practices. SMALL BUSINESS ------------------- 25 Store IDs products’ executive of FAO.