Wall Street Firms' 2010 Profits May Fall 69% From a Year Earlier
Nov 16th 2010 5:29PM
Updated Nov 16th 2010 6:19PM
Wall Street firms' collective 2010 profits may fall 69% from a year earlier on less activity in the securities industries, more financial regulation, and fewer gains from Federal government bailouts, according to a New York State Comptroller report released Tuesday. Nevertheless, 2010 profits still may be the fourth-highest on record.
Financial institutions' profits this year may total $19 billion, down from 2009's record $61.4 billion, New York State Comptroller Thomas DiNapoli said in the report. Wall Street firms earned $14.1 billion for the first six months of the year, down 61% from a year earlier, as revenue dropped 27%.
"The fallout led to bank failures, consolidations, and regulatory reforms that have changed the way the securities industry operates," DiNapoli said in the report. "New regulations will require increased capital reserves, limits on some activities, and compensation practices that reward long-term performance rather than short-term gains."
With earnings down, Wall Street firms will have cut about 38,000 jobs during the financial crisis. Firms cut 2009 wages from a year earlier by 29%, the largest single-year drop in at least three decades.
After two years of losses, Wall Street returned to record profitability last year largely because of Federal government bailouts. Financial firms' 2009 profit was almost three times that of 2006, according to the report.