NEW YORK CITY-The financial regulatory reforms signed into lawby President Obama earlier this week are intended to accomplish anumber of things. But one potential effect that probably wasn’tdesigned into the legislation is a leveling-off of the economicrollercoaster ride the city’s economy has taken as the financialservices sector’s fortunes have risen and fallen in recent years,says a report from Eastern Consolidated.

“New York City’s dependence on Wall Street for its tax base hasgrown substantially over the last two decades as profits havesoared, but Wall Street is also largely responsible for the heavyvolatility in New York’s economy,” the firm’s chief economist,Barbara Byrne Denham, writes in the report.

Financial services in recent years has generated more payrolltaxes in the city than any other in recent years, so it stands toreason that the sector accounted for more than two-thirds of the$2.9-billion decline in payroll taxes here in 2009. The newlyenacted Dodd-Frank bill could lessen that volatility, “which shouldrein in profits for Wall Street firms in the short term but shouldstabilize revenues in the long run,” Denham writes.