Wall Street produced $10.1 billion in profits for the first half of the year, but second-half profits could be suppressed due to “dysfunction” in Washington, higher interest rates and greater litigation costs, New York state Comptroller Thomas DiNapoli said Tuesday.
Although the $10.1 billion for the first six months of 2013 was close to the $10.5 billion in profits for the first half of 2012, Mr. DiNapoli said he doubted the securities industry’s 2013 full-year tally would match the $23.9 billion of 2012.
In a telephone news conference Tuesday, Mr. DiNapoli — also the sole trustee of the $158.7 billion New York State Common Retirement Fund, Albany — predicted full-year securities industry profits could be $15 billion.
“Dysfunction in Washington is not good for business,” said Mr. DiNapoli, referring to a 16-day shutdown caused by Republicans and Democrats fighting over the federal budget as well as to the last-minute agreement by Congress to temporarily increase the debt ceiling. “Wall Street doesn’t like unpredictability.”
Mr. DiNapoli said he feared continuing questions about resolving disputes over the debt ceiling and federal budget could disrupt the U.S. economy and harm the economies of New York City and the state.
In a report issued Tuesday discussing the economic impact of the securities industry, Mr. DiNapoli’s office cited broker-dealer operations of the New York Stock Exchange member firms as a traditional measurement of Wall Street profitability.
Mr. DiNapoli’s report estimated securities industry employment reached 163,400 in August, which is 25,000 — or 13.5% — less than employment before the economic crisis of 2008-2009. The industry “will continue to reorganize and streamline as it adapts to regulatory changes,” the report said.
The average salary, including bonuses, paid to securities industry employees in New York City was $360,700 in 2012, flat vs. 2011 and 2010, the report said. The peak was $410,500 in 2007.
The report said the securities industry accounted for 21.9% of all private-sector wages in New York City in 2012, even though it accounted for only 5.1% of private-sector jobs.