Comptroller Thomas DiNapoli said on Tuesday profit for all of Wall Street could top $55 billion for 2009, nearly triple the previous record year. Last year, the U.S. economy began to stabilize as lenders raced to repay federal bailout money they had come to view as a stigma.
Average taxable bonuses on Wall Street rose to $123,850 in 2009, DiNapoli said in a statement. Compensation at Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley, three of New York's biggest banks, rose 31 percent, he added.
The comptroller's annual report on Wall Street pay is closely watched not only by Wall Street, but also by politicians eager to rein in runaway pay in a still-weakened economy where unemployment remains high and tax revenue remains depressed.
While bonuses are well below the level set in 2007 and are now more closely tied to company performance, DiNapoli acknowledged that many may consider them out-sized given the lingering problems in the economy.
(F)or most Americans, these huge bonuses are a bitter pill and hard to comprehend, he said.
Taxpayers in 2009 rescued the U.S. banking industry with hundreds of billions of dollars in bailouts, putting into focus pay practices on Wall Street banks.
As a result, President Barack Obama appointed a pay czar who had the authority to rein in pay at firms that received extraordinary bailouts.
The public outrage over pay also affected the pay practices at some banks, even after they had paid back the taxpayer bailout. The anger stemmed from the quick return to profitability and large bonuses so soon after the bailout.
Wall Street's dominant bank, Goldman Sachs, for example, did not give out any compensation in the fourth quarter of 2009, and instead made a $500 million charitable contribution. The firm earlier was on pace to pay out more than $20 billion in compensation, shattering its record from 2007.
Banks have also changed their compensation structures to pay employees in stock that must be held for multiple years, a move designed to curb risk-taking for short-term gains.
DiNapoli said financial firms devoted a much lower share of net revenue to compensation compared with past years, adding that tying compensation to long-term sustainable profits is a step in the right direction.
(Reporting by Jonathan Stempel and Steve Eder, additional reporting by Jonathan Spicer; Editing by Lisa Von Ahn, Maureen Bavdek and Matthew Lewis)