NEW YORK (Reuters) - Wall Street firms slashed cash bonuses for New York City employees by 44 percent in 2008, as they reeled from record losses in the securities industry, New York State’s comptroller said in a report issued on Wednesday.
Bonuses fell to $18.4 billion from $32.9 billion in 2007, the largest decline ever and the biggest percentage drop in more than 30 years, Comptroller Thomas DiNapoli said. The size of the bonus pool is the sixth-largest on record, he said.
Losses from traditional broker-dealer operations of New York Stock Exchange member firms topped $35 billion in 2008, more than triple the record set a year earlier, DiNapoli said.
Meanwhile, Wall Street shed 19,200 jobs, or 10.2 percent, in New York City over the last 14 months, ending the year with 168,600 workers.
The declines reflect the souring of the global economy and credit markets, as well as the disappearance of the traditional Wall Street investment banking model.
What were the five largest Wall Street banks no longer exist in the form they began 2008. Goldman Sachs Group Inc and Morgan Stanley became commercial banks, Bear Stearns Cos was bought by JPMorgan Chase & Co, Lehman Brothers Holdings Inc went bankrupt and Merrill Lynch & Co was acquired by Bank of America Corp.
JPMorgan and the ailing Citigroup Inc are also based in New York.
Lower bonuses also cut into tax revenue, at a time New York Gov. David Paterson and legislators are trying to slash a potential $15.4 billion budget deficit over 14 months. DiNapoli said tax revenue could fall by nearly $1 billion in New York state and $275 million in New York City from lower bonuses.
The comptroller said the industry’s problems could worsen, despite an influx of hundreds of billions of dollars of taxpayer money from the federal Troubled Asset Relief Program.
“The industry is still continuing to write off toxic assets,” DiNapoli said in a statement. “It’s painfully obvious that 2009 will probably be another difficult year.”
DiNapoli said the average Wall Street bonus fell 36.7 percent to $112,000 in 2008. The average decline was smaller than the drop in the overall bonus pool, he said, because the pool was shared among fewer workers as jobs were cut.
Reporting by Jonathan Stempel and Joan Gralla; Editing by Lisa Von Ahn