(Bloomberg) -- New York City’s securities industry posted its most profitable first half to a year in more than a decade, helping government coffers, even as the coronavirus pandemic and a resulting recession battered the U.S. economy, the state’s comptroller said.
A surge in trading and underwriting activity drove pretax profits up to $27.6 billion, nearly eclipsing earnings reported for all of last year, Comptroller Thomas DiNapoli said in a report Thursday. While it was the industry’s best first half since 2009, he said, the slow recovery many other sectors are experiencing may hurt results going forward.
This year’s increase “helps our state and city budgets because the securities industry provides an outsized source of revenue, but the rising profits on Wall Street are disconnected from the pain being felt on Main Street,” DiNapoli said in a statement, calling for another round of economic stimulus by the federal government. “Wall Street’s growth can only be sustained if there is broad economic recovery.”
Bank executives have been urging lawmakers to approve another round of fiscal stimulus, saying the economic recovery would be hampered without it. House Speaker Nancy Pelosi said Thursday that she and Treasury Secretary Steven Mnuchin are “just about there” on a deal for a coronavirus relief package even as outstanding differences are still being negotiated.
Traders at Wall Street’s five biggest banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., which reported third-quarter earnings last week, added $24 billion more to their companies’ coffers in 2020 than they did a year ago.
Even with profits climbing, banks have restarted job cuts, abandoning no-layoff policies put in place as the pandemic began to intensify earlier this year. Wall Street is on pace to lose 7,300 jobs this year, almost half the positions added since 2013, DiNapoli said.
Firms set aside almost 5% more for bonuses in the first half of 2020 than they did a year earlier, but bonus sizes “will depend heavily on economic activity in the second half of the year,” according to the comptroller’s report. “As the larger securities businesses are embedded within bank holding companies where profitability has been declining, the overall bonus pool is likely to be affected.”
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