Joseph (Jay) L. Hooley is chief executive of State Street Corp., a major financial services firm in Boston and one of the state’s largest employers, with 12,000 workers here. Hooley spoke recently with Globe reporters and editors about the economy, the Dodd-Frank financial reform law, and the company’s $11.5 million tax break from the city to build new offices in the Innovation District along the South Boston Waterfront.
How do you think the state ranks vs. other states you’re operating in, as a place to do business?
We would measure it against many dimensions, beginning with labor, since labor is the dominant cost. I would say quality of labor, labor supply, is quite good. Not surprising given the university base here. Expensive. Cost of living is expensive. So as a result we look pretty carefully at what jobs we think should be here vs. what jobs should be in other parts of the country and the world.
From a dimension of business friendly/tax oriented, getting better. The dialogue with the state and the city is good and getting better.
As part of the agreement with the city, are you promising to create any jobs?
No. I mean we’re going to create jobs given the construction; we estimate some 800 jobs that will be enabled as a result. But it’s really a commitment to be in the city. And it’s open-ended.
Is there any commitment to retain all the jobs you have in Massachusetts?
You know, we plan to retain the jobs. But the tax benefit was not tied to job activity.
Was the tax break part of what drew you to the waterfront?
Look, it’s a 550,000-square-foot building over 15 years. You know the numbers, it’s in the multiple tens of millions of dollars that we’re committing. The tax break was a relatively small piece of that. Was it a factor? At some level. But it certainly wasn’t the dominant factor.
There’s some controversy over tax breaks. Why should deep-pocketed companies use taxpayer money at a time when budgets are really tight. Do you think about that?
Yes. We also think about the commitment we’re making to stay in the city. We’re also thinking competitively, making sure we’re not disadvantaged vis-a-vis folks that we service and compete against. So we try to strike that balance. All of us know that the city, the state, the country, are going through a difficult time. So we try to strike that right balance, between doing the right thing by shareholders, by the community.
You endorsed reforms on Wall Street. But what do you support, and what do you think goes too far?
If we just pick on Dodd-Frank, the prominent regulatory reform set of bills, there’s a lot in it. So by example, I’ll give you a couple. Derivatives — having derivatives centralized, cleared through a central clearing house, is, to me, hard to argue with that. [Derivatives are complex financial instruments that played major role in the recent financial crisis.]
What’s the argument for it?
The argument for central clearing? Control. Independent, third-party, transparency, better pricing. Generally, I’d just raise it up a level and say you can’t look back at what we’ve been through in 2007 and 2008 and believe that some things don’t have to fundamentally change. Something was missed. The leverage [borrowing] in the system was too high, the controls by regulators on things like derivatives. I am supporting checks and balances, and controls, more transparency.
What do you make of [former Citigroup chief executive] Sandy Weill’s comments recently, basically endorsing the old Glass-Steagall divisions between traditional banks that take deposits and investment banks that make risky trades, given he was the architect of much of the current system?
Times have changed. That was 15 years ago. When you go through what we’ve just come through, you have have to put a different lens on the business. What’s safe and sound and appropriate given the financial industry today, which is enormously more complex than when Sandy Weill put [financial services firm] Primerica together. It’s a different landscape.
What did you think about Boston Fed president Eric Rosengren pressing his colleagues at the Fed to do more for the economy?
I think Eric has a real pulse on the global economy. He’s traveled extensively. I think he’s got pretty good insights. The question is what real influence does the Fed have? It can signal certain things, like holding interest rates where they are for the next couple years. And they can use their balance sheet to buy back securities. He’s a very credible person who understands the severity of the European situation.
And how did you interpret his motivation for the comments?
I really don’t know the inner workings of the Fed. But from a policy standpoint, I tend to think he’s on the right point, which is the Fed should act aggressively.