NY comptroller warns of weakness on Wall Street

By SAMANTHA GROSS, The Associated Press
Posted Oct. 11, 2011, at 6:59 p.m.

NEW YORK — Wall Street is again losing jobs because of global economic woes, threatening tax revenue for a city and state heavily reliant on the financial industry, New York state Comptroller Thomas DiNapoli said Tuesday.

After adding 9,900 jobs between January 2010 and this April, the industry shed 4,100 jobs through August and could lose nearly 10,000 more by the end of 2012, DiNapoli said. That would bring the total industry loss to 32,000 positions since the economic crisis of 2008. The sector employed 166,600 people in investment banks, securities trading firms and hedge funds as of August.

DiNapoli said New York Stock Exchange firms earned $9.3 billion in the first quarter of this year, but declined sharply in the second quarter and are likely to reach $18 billion for the year, a third less than in 2010.

“The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year,” he said. “It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year.”

New York City Mayor Michael Bloomberg said DiNapoli’s numbers were on target.

“We have a very conservative estimate of Wall Street profits,” he said. “We think our estimates are probably still reasonably accurate. So I don’t think it’s dramatically worse than what we have in our budget, but it’s certainly not better.”

Cash bonuses also declined last year.

Securities activities drove 14 percent of state tax revenue and 7 percent of New York City’s last year. DiNapoli warned that current and future collections are likely to fall short because of the weakness.

“Excessive risk-taking on Wall Street was a major factor leading to the financial crisis and the recession,” he said. “Regulatory changes that reduce risk and focus attention on long-term profitability rather than short-term gains will enhance stability. Despite the weaknesses we are seeing, the securities industry remains profitable and is a key component of the economies of New York City and New York state.”

Bloomberg said the losses will definitely impact the city.

“We do know that we’re going to have a tough time here. And we’re going to make sure that we preserve the vital services of the city,” he said. “In the long term I couldn’t be more optimistic about New York City but we’re going to have some short-term pain and it’s going to be real pain.”

Associated Press writer Michael Gormley in Albany, N.Y., contributed to this report.

http://bangordailynews.com/2011/10/11/news/nation/ny-comptroller-warns-of-weakness-on-wall-street/ printed on July 12, 2014