Not a Lexis+ subscriber? Try it out for free.

Financial Fraud Law

Wall Street Profits Could Top $19 Billion in 2010

 Wall Street is on pace to earn $19 billion in 2010, according to a report released by New York State Comptroller Thomas P. DiNapoli. The report noted 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.

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 estimated that the average cash bonus may be larger because the pool will be shared among fewer workers.  The report also found that:

·         While 2010 profits could be 69 percent below last year’s extraordinary record, this year’s profits could be the fourth highest in absolute dollars and the sixth best year (in at least 30 years) on an inflation-adjusted basis;
·         Wages paid to securities industry employees who work in New York City declined by 28.5 percent in 2009, the largest decline in at least 30 years. The decline reflects job losses but also a sharp drop in bonuses that were paid at the beginning of the calendar year for work performed in 2008, which registered record losses. The decline in wages paid to the securities industry accounted for nearly two thirds of the wages lost in all of New York City in 2009;
·         Nearly one in six jobs lost in New York City during the recession were in the securities industry. Job losses could reach 38,000 jobs if the industry contracts by 20 percent as it did during the past two downturns. Securities firms are likely to continue restructuring as they adapt to the new federal and international regulatory environment; and
·         The average wage in the securities industry in New York City fell by a record 20.5 percent in 2009 to $311,330—still 4.9 times higher than the average in the rest of the private sector ($63,650);
·         The Office of the State Comptroller estimated that cash bonuses paid to security industry employees located in New York City for work performed in 2009 grew by 17 percent to $20.3 billion, following a 47 percent decline in 2008.