Virus Aside, Wall St. Booms, Says State Official

By M.A. RAHMAN

New York State Comptroller Thomas DiNapoli reported on Thursday that profits in the securities industry for the first six months of 2020 increased by a whopping 82 percent of $27.6 billion  despite the economic ramifications from the pandemic.

The Wall Street sector made a total pre-tax profit nearly equal to the $28.1 billion made in all of 2019.

“The reason profits on Wall Street are doing so well this year has to do with the $2.4 trillion in federal relief, the actions of the Federal Reserve with its interest rates lowered to near zero and the Federal Reserve adding over $3 trillion to its balance sheet,” DiNapoli said.

According to the Comptroller, these factors spurred growth in securities offerings, with debt offerings in particular reaching record levels. Additionally, the Comptroller’s report indicated the disruption to financial markets caused by the pandemic likely benefited securities.

The wild market swings prompted by the pandemic helped to raise trading volume with firms’ commissions and trading income with securities firms’ income from underwriting rising by more than one-third in the first half of 2020 over the same period last year.

Yet the net revenue of the securities firms’ grew by 3.8 percent in 2019, slower than the previous two years, adversely affecting employment and bonuses.

“Wall Street has an outside influence, 18 percent of New York State tax collections are tied to this industry, while about six percent of New York City tax collections are tied to Wall Street,” he added.

DiNapoli conjectured that each job gained or lost on Wall Street led to the creation or loss of three additional jobs in other industries here, with 1 in 10 jobs in New York City and 1 in 15 jobs in New York State associated with the industry.  Wall Street is expected to cut 7,300 jobs, erasing nearly half of the jobs gained since 2013 after recovering from the recession.

“There are many reasons why cuts have occurred,” Comptroller Press Secretary Mattew Sweeney said in an email. “A volatile March still led to job cuts and trading strategies can lead to funds losing money even if the market is headed up. There are also cases where certain firms may not have gotten the lifeline they needed to make payroll when the market was up.”

The city has forecast a 34 percent decline in bonuses this year. The Comptroller reports profits of securities for the second half of 2020 were still expected to surpass last year, barring any further unforeseen events.