New York State Comptroller DiNapoli: Wall Street Bonuses Rise 17%

US: Wealth Disparities Approaching 1920s Levels

Thomas DiNapoli, New York State comptroller, listens during an editorial board meeting in New York, on June 1, 2009. (Bloomberg)

Feb. 23 (Bloomberg) — Wall Street bonuses rose 17 percent in 2009 from a year earlier as the securities industry rebounded from the financial crisis, New York State Comptroller Thomas DiNapoli said.

Financial firms disbursed $20.3 billion compared with $18.4 billion in 2008, DiNapoli’s office calculated, basing its estimate on personal income-tax collections. It doesn’t include stock options or other types of deferred pay. The bonus pool was the second-largest ever, DiNapoli said in his yearly report.

Cash and stock bonuses fell about a third from 2007, he said. New York State’s budget deficit is estimated to be $8.2 billion, 10 percent more than estimated in January, because Wall Street’s cash bonuses are less than forecast, Governor David Paterson said Feb. 3. Personal income tax collections in January were $1 billion below the $7.08 billion the state projected.

“It would be preferable to have predictable growth and profitability,” DiNapoli said in an interview on Bloomberg Television today. “With New York depending on the sector for budget health, we need Wall Street to be profitable.”

The average bonus for the industry was $123,000 last year, the comptroller said. Wall Street has added 3,900 jobs through December and DiNapoli said he expects that trend to continue. He said the increase in tax revenue from higher bonuses won’t solve New York’s budget problems.

Bonus Pool

The size of the bonus pool was harder to determine since many firms paid a larger percentage of bonuses in stock and deferred compensation, DiNapoli said in the statement. Wall Street accounted for 24 percent of the wages paid to New York City workers in 2008 and 5 percent of the jobs.

In the most profitable years, high levels of compensation, corporate earnings and capital gains from Wall Street-related activity accounted for as much as 20 percent of the state’s total tax revenue and 12 percent of the city’s collections, DiNapoli’s office has said.

“The bonuses are welcome news in some ways for the New York City and New York State economies,” DiNapoli said at a press conference today. “There’s a great deal of resentment against the Street for its role in the global economic meltdown.”

New York City lost 26,300 jobs in the financial industry, including securities, insurance, credit, banking and commodities in the 12 months ending in December 2009, a 5.8 percent 12-month decline, the state Labor Department reported last month. For every new job in the securities industry, three others are created for New York’s economy, DiNapoli said.

Obama Criticizes Bonuses

President Barack Obama called bank bonuses “obscene” at least twice this year, and Democratic Representative Andre Carson of Indiana said the industry’s practices are “reckless” during a House Financial Services Committee hearing on compensation.

In the fourth quarter, Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation. The three Wall Street firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion.

Pay at these three firms increased by 31 percent in 2009, DiNapoli’s report said. Most top executives won’t receive a cash bonus for 2009 and will take pay in types of deferred compensation.

Obama, speaking in an interview earlier this month, said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chief Executive Officer Jamie Dimon or the $9 million paid to Goldman Sachs CEO Lloyd Blankfein. The president said compensation packages over the last decade haven’t always been commensurate with performance, and reiterated his call for shareholders to have a say in CEO pay.

Financial services companies employed 430,400 at the end of 2009, DiNapoli said. New York City unemployment was 10.6 percent in December, 3.6 percentage points higher than a year earlier. Unemployed city residents totaled 424,500, an increase of 44,700 in six months, the state labor department reported in January.

To contact the reporters on this story: Henry Goldman in New York at; Elizabeth Hester in New York at

Last Updated: February 23, 2010 12:17 EST
By Elizabeth Hester and Henry Goldman

Source: Bloomberg

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