New York:
It's about as official as it gets: The big money is back on Wall Street.
Flush with record profits in 2009, investment banks and securities firms paid employees in New York City an estimated $20.3 billion in annual bonuses, according to a report released Tuesday by the New York state comptroller. That was up from $17.4 billion for 2008. The tally, which is based largely on personal income tax receipts, provides a signpost for what has been one of the most controversial bonus seasons in Wall Street history.
For New York, the rapid return of big paydays at banks - a development that has prompted an outcry from many ordinary Americans - is something of an embarrassment of riches, since bigger bonuses mean more money for the public coffers.
The comptroller, Thomas P. DiNapoli, acknowledged the divide between the financial industry and other professions, but said that the financial industry's new prosperity would ultimately trickle down to the rest of the New York economy. His office estimated that the industry could exceed $55 billion in profits last year.
"The key thing now is, do we all benefit?" DiNapoli said at a news conference.
The 2009 bonus payouts trailed the record $25.6 billion awarded in 2005, when the housing bubble was inflating and the stock market was flying high. But DiNapoli and pay experts said the total value of 2009 bonuses was far larger than DiNapoli's estimate, since many banks paid bonuses in the form of deferred stock, which was not immediately taxable, rather than cash.
While the comptroller's office estimates that bonuses were up 17 percent from 2008, Alan Johnson, a Wall Street compensation consultant, said the payouts were in reality
about 30 percent higher.
"For the city of New York and the state, this is good news," Johnson said.
After the billions in taxpayer bailouts, the numbers highlight the divide between Wall Street - where the recovery has been stronger than DiNapoli's office had expected a year ago - and the rest of America, where growth is slow and unemployment remains high.
But even as pay recovers, the switch to stock awards from cash is hitting the amount of taxes flowing to the state because bankers do not have to pay taxes on their deferred awards immediately, although some choose to do so.
DiNapoli said the dent in tax revenues was worth it if the result was better behavior on Wall Street and an avoidance of the unsustainable "highs and lows all of us went through."
Even so, the comptroller's report said, the rise in bonuses added an extra $600 million to the state's coffers over a year ago, and an extra $75 million to the city's.
As to the question of when the rest of the economy would benefit, he said that previous studies found that for every job created in the securities industry, three jobs were created elsewhere in the state's economy.
Employment on Wall Street fell by 31,500 jobs between November 2007 and August last year. But since then, the industry had begun to recover, if only weakly, creating 3,900 new jobs through December, the comptroller said.
The report issued Tuesday found that compensation at the biggest brokers rose faster than at smaller institutions.
Compensation at Goldman Sachs, Morgan Stanley and the investment banking operations of JP Morgan Chase rose 31 percent last year.
The average taxable bonus across the industry rose to $123,850.
Flush with record profits in 2009, investment banks and securities firms paid employees in New York City an estimated $20.3 billion in annual bonuses, according to a report released Tuesday by the New York state comptroller. That was up from $17.4 billion for 2008. The tally, which is based largely on personal income tax receipts, provides a signpost for what has been one of the most controversial bonus seasons in Wall Street history.
For New York, the rapid return of big paydays at banks - a development that has prompted an outcry from many ordinary Americans - is something of an embarrassment of riches, since bigger bonuses mean more money for the public coffers.
The comptroller, Thomas P. DiNapoli, acknowledged the divide between the financial industry and other professions, but said that the financial industry's new prosperity would ultimately trickle down to the rest of the New York economy. His office estimated that the industry could exceed $55 billion in profits last year.
"The key thing now is, do we all benefit?" DiNapoli said at a news conference.
The 2009 bonus payouts trailed the record $25.6 billion awarded in 2005, when the housing bubble was inflating and the stock market was flying high. But DiNapoli and pay experts said the total value of 2009 bonuses was far larger than DiNapoli's estimate, since many banks paid bonuses in the form of deferred stock, which was not immediately taxable, rather than cash.
While the comptroller's office estimates that bonuses were up 17 percent from 2008, Alan Johnson, a Wall Street compensation consultant, said the payouts were in reality
about 30 percent higher.
"For the city of New York and the state, this is good news," Johnson said.
After the billions in taxpayer bailouts, the numbers highlight the divide between Wall Street - where the recovery has been stronger than DiNapoli's office had expected a year ago - and the rest of America, where growth is slow and unemployment remains high.
But even as pay recovers, the switch to stock awards from cash is hitting the amount of taxes flowing to the state because bankers do not have to pay taxes on their deferred awards immediately, although some choose to do so.
DiNapoli said the dent in tax revenues was worth it if the result was better behavior on Wall Street and an avoidance of the unsustainable "highs and lows all of us went through."
Even so, the comptroller's report said, the rise in bonuses added an extra $600 million to the state's coffers over a year ago, and an extra $75 million to the city's.
As to the question of when the rest of the economy would benefit, he said that previous studies found that for every job created in the securities industry, three jobs were created elsewhere in the state's economy.
Employment on Wall Street fell by 31,500 jobs between November 2007 and August last year. But since then, the industry had begun to recover, if only weakly, creating 3,900 new jobs through December, the comptroller said.
The report issued Tuesday found that compensation at the biggest brokers rose faster than at smaller institutions.
Compensation at Goldman Sachs, Morgan Stanley and the investment banking operations of JP Morgan Chase rose 31 percent last year.
The average taxable bonus across the industry rose to $123,850.
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