Wall St bonuses may top last year as profits soar (Reuters)

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was a long time a coming. But Wall St bonuses may top last year as profits soar
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NEW YORK (Reuters) – Despite the weak U.S. economy, this year could be the second most profitable for New York City’s securities industry, and the average bonus may top last year’s because so many bankers and brokers have been laid off.

“Wall Street earned $21.4 billion during the first three quarters of 2010,” state Comptroller Tom DiNapoli said in a report on Wednesday.

“While much less than last year’s record of $61.4 billion, which was fueled by federal assistance, the securities industry is on track in 2010 for the second-highest level of profitability on record,” he said.

Last year Wall Street paid out $20.3 billion in bonuses, DiNapoli said, but 2,700 securities and commodities employees got pink slips from September 2009 through last September, according to employment data. The high-paying industry only employed 160,200 people in September, down from a peak of 200,300 in December 2000.

Wall Street’s surprisingly swift recovery — which is a boon for the city’s finances because of increased tax collections — was also highlighted in a report by City Comptroller John Liu issued on Wednesday.

“The astounding recovery of financial firm profitability in 2009 has been followed by a mixed year in 2010, yet total compensation in the industry is expected to be up modestly once year-end bonuses are paid,” Liu said.

But Wall Street has the option of paying more of the traditional annual bonuses in stock instead of cash to help retain employees and dampen politicians’ ire at whopping payouts, which for stars can run in the millions of dollars.

With Congress poised to extend the Bush tax cuts, there also is less incentive for bankers and brokers to demand their bonuses this year instead of waiting until next year.

The post credit-crunch era of low interest rates has yet to end and this is another hazard for the city.

Liu noted that one of the city’s budget risks was his “belief that Wall Street cash bonuses will not return to the levels seen prior to the financial crisis and that interest income of high-net-worth taxpayers will remain relatively flat for an extended period.”

New York City relies heavily on its wealthiest for personal income tax collections. Just 5,000 residents whose incomes topped $4 million a year paid nearly 39 percent of all of the city’s personal income tax collections in 2007, Mayor Michael Bloomberg said earlier this year.

(Reporting by Joan Gralla; Editing by Kenneth Barry)

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