November 16, 2010
DiNapoli: Wall Street Profits Could Top $19 Billion in 2010
Earnings Down from Record High, But Street on Course for Fourth Best Year Ever
Wall Street rebounded quickly from record losses in 2007 and 2008 and is on pace to earn $19 billion in 2010, according to a report released today by New York State Comptroller Thomas P. DiNapoli. While the pace of job losses has slowed, the industry is still downsizing as it adjusts to new regulatory and economic conditions. DiNapoli’s report notes that while last year’s record $61.4 billion profits are not likely to be repeated anytime soon, New York’s securities industry is still likely to record its fourth best year ever.
“Wall Street is adjusting to regulatory reforms and learning how to do business in the new financial reality,” DiNapoli said. “These actions may trim profits and cash bonuses in the near term, but they are necessary in order to encourage long-term stability and profitability. As long as other international financial centers play by similar rules, Wall Street should retain its leadership position.
“New York needs Wall Street to do well, but the securities industry is still losing jobs. The state can’t rely on a full recovery of Wall Street to resolve its budget shortfall.”
DiNapoli’s report noted that the first quarter of 2010 was among the most profitable on record ($10.3 billion), but second quarter profits were more in line with pre-crisis levels, falling to $3.8 billion. Wall Street lost a record $54 billion during 2007 and 2008, but with the help of federal bailouts the industry quickly returned to profitability. In 2009, Wall Street earned $61.4 billion—nearly three times more than in 2006.
While Wall Street’s bonus pool may decline from last year’s level, DiNapoli’s report estimates that the average cash bonus may be larger because the pool will be shared among fewer workers. DiNapoli will release his report on Wall Street bonuses early next year.
The report also found that:
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