NY comptroller warns of weakness on Wall Street

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Wall Street is again losing jobs because of global economic woes, threatening tax revenue for a city and state heavily reliant on the financial industry, New York Comptroller Thomas DiNapoli said Tuesday.

DiNapoli, who oversees New York’s finances, including tax receipts, said that after adding 9,900 jobs between January 2010 and this April, the industry shed 4,100 jobs through August and could lose nearly 10,000 more by the end of 2012. That would bring the total industry loss to 32,000 positions since the economic crisis of 2008.

He said profits at New York Stock Exchange firms earned $9.3 billion in the first quarter of this year, but declined sharply in the second quarter and are likely to reach $18 billion for the year, a third less than in 2010.

“The securities industry had a strong start to 2011, but its prospects have cooled considerably for the second half of this year,” DiNapoli said. “It now seems likely that profits will fall sharply, job losses will continue, and bonuses will be smaller than last year.”

Cash bonuses also declined last year.

Securities activities drove 14 percent of state tax revenue and 7 percent of New York City’s last year. DiNapoli warned that current and future collections are likely to fall short because of the weakness.

“Excessive risk-taking on Wall Street was a major factor leading to the financial crisis and the recession,” he said. “Regulatory changes that reduce risk and focus attention on long-term profitability rather than short-term gains will enhance stability. Despite the weaknesses we are seeing, the securities industry remains profitable and is a key component of the economies of New York City and New York state.”