Cash bonuses to be paid to New York City securities workers for their 2011 performance are expected to slide 14 percent to $19.7 billion as stiffer regulations took a toll on profits, New York State's comptroller said Wednesday.
The securities industry, which still has not recovered fully from the 2008 financial crisis, is expected to cut the average cash bonus by 13 percent to $121,150, Comptroller Thomas DiNapoli said in an annual report.
"Profits were down sharply, and securities firms in New York City resumed downsizing in the second half of the year," DiNapoli said. "The securities industry, which is a critical component of the economies of New York City and New York State, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms."
Wall Street's big profits and high compensation became focal points of the Occupy Wall Street movement last year, which stirred up national debate about wealth distribution and taxes.
Compensation by member firms of the New York Stock Exchange as a percentage of net revenue of their broker/dealer unit was nearly 52 percent in the first three quarters of 2011, DiNapoli said. That compares to an estimated 47 percent for all of 2010 and up from 36 percent in 2009.
The profits of the broker/dealer units, however, fell sharply in 2011 and will not exceed $13.5 billion, DiNapoli said, down by more than half from $27.6 billion in 2010. It was the second year in a row that profits fell by more than half.
The industry posted record profits in 2009, hitting $61.4 billion, a total that was boosted by federal assistance. Underscoring the volatility of Wall Street, DiNapoli said the sector lost a record total of $53.9 billion over 2007 and 2008.
The securities industry began 2011 strongly, earning $12.6 billion in the first half, DiNapoli said. But the sector lost $3 billion in the third quarter.
"This is fallout from the financial crisis and anticipation of continued changes in regulatory reform as a response to that crisis," DiNapoli said in an interview with MSNBC.
"So you're seeing more stock options and deferred compensation from a couple years ago being paid out this year. You're really seeing a response to what was a difficult second half in 2011," he added.
Layoffs on Wall Street resumed in April 2011. Some 4,300 jobs were cut from April to December 2011, the comptroller said. During the financial crisis, the industry shed 28,000 workers, and only 9,600 had been hired when the new rounds of pink slips began last spring.