ALBANY -- Wall Street trading houses may cut 10,000 jobs by the end of 2012 and will likely see just a third of the profits they booked in 2010, according to an analysis released Tuesday by Comptroller Tom DiNapoli.
The comptroller's annual report found profits trailed off after the first quarter of the year and have declined by 10.8 percent to $12.6 billion. The analysis was limited to broker-dealer firms -- a major part of the financial sector, which also includes insurance firms and investments funds.
"The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year," DiNapoli said. "It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year."
All of the factors have a deleterious effect on the state budget, which DiNapoli said derives roughly 14 percent of its income tax revenues from the securities industry. That number is close to 20 percent when other financial firms are counted.
The comptroller issued an upbeat report after the first quarter, when Wall Street profits were more robust than expected. The new and more dire assessment was met with a similarly even response from the keepers of the state spending plan: It will hold.
"We agree with the comptroller that there is softness in the securities industry, but we have built that softness into the financial plan," said Morris Peters, a spokesman for the Division of the Budget. "We believe our numbers for the fiscal year are on track, but certainly we wish there was a rosier outlook and share the comptroller's concerns."
Next year's state budget deficit is estimated at $2.4 billion.
Kathryn Wylde, who heads the business group Partnership for New York City, said the decline comes in part because of new federal regulations requiring banks to hold more money in reserve and pending lawsuits, including one related to how firms handled mortgage-backed securities that is subject to negotiation with the country's 50 attorneys general.
"It's a dose of realism about how serious the impact of a combination of economic and regulatory and legal actions are on our financial services industry," she said. "It's easy to bash Wall Street, and there are lots of reasons for doing that, but Wall Street pulled New York City into the global economy starting in the 1980s and is key to our future as a great world city."
DiNapoli reported securities jobs have a two-to-one multiplier in New York City's larger economy. He also reported the average salary in the industry grew 16.1 percent from 2010, to $361,330. This is 5.5 times higher than the average private-sector salary in the five boroughs.
"Don't cry for them at this point," said Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, a labor-backed progressive group that is pushing for lawmakers to renew an income tax surcharge on New Yorkers making more than $200,000.
It will expire at the end of the year.
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