President Barack Obama’s demand Thursday that Congress clamp down on the size of banks and their investments got major blowback from New York City Mayor Michael Bloomberg, who said it could cause layoffs and hurt the city.

It’s a clash between the president and the mayor. President Obama wants to whittle away at the size of the financial services industry.

“The American people will not be served by a financial system that comprises just a few massive firms,” the president said.

But Mayor Bloomberg said the banks and Wall Street are part of the bedrock of the city’s economy, and efforts to slash their business just means less tax revenue for the city, which brings up the dreaded “L” word.

“If that’s the case then we’ll have to lay off people because it will really hurt our industry,” Bloomberg said.

The mayor was so upset about the move — and a suggestion that Wall Street bonuses be put in escrow, which means the money wouldn’t be spent here, wouldn’t help the city economy — he responded with a proposal of his own for members of Congress.

“Maybe we should hold back their salaries for a decade or so and see whether the laws they pass work out,” Bloomberg said.

The mayor also demanded that the members of our congressional delegation go to the mat to protect the financial services industry, much like senators from Texas protect the oil industry.

Senator Charles Schumer said he will try to protect New York, but that some reforms are necessary.

“It’s a careful balance. You can’t say do nothing because we all know the banks made mistakes, but you can’t be so draconian that you cause job loss or make the institutions not function properly,” Schumer said.

The banking reforms still have to be negotiated by Congress, where people are still reeling by the effects of the Massachusetts Senate race, so it’s anybody’s guess what will happen.

Mayor Bloomberg also said that limiting the size of banks will hurt their competitiveness in the global economy.

(Source: WCBSTV)