State Comptroller Thomas DiNapoli last week called for more transparency for Wall Street bonuses funded by taxpayer dollars and stressed that future budgets will need to reflect reduced compensation.
Wall Street bonuses amounted to an estimated $18.4 billion in 2008, a 44% drop from the $32.9 billion in 2007 but comparable to those handed out in 2004, according to a report DiNapoli released last week. The news immediately sparked a national outcry, with many criticizing bonuses in an industry that showed huge losses and is receiving a massive tax-payer-funded bailout. President Obama himself called the bonuses “shameful.”
The steep decline in bonuses will adversely affect personal income tax receipts for the state and New York City. State coffers will receive $1 billion less revenue, while the city is expected to absorb a $275 million loss in revenue, according to the report.
DiNapoli said New York must craft future spending plans that take into account a financial sector that is expected to generate lower profits. In 2006 and 2007, the state benefited from Wall Street bonuses that reached more than $30 billion, yet “those days are probably long gone,” DiNapoli said.
“We had these outsized profits from the sector [and] we though that would be the future,” the comptroller said during a conference call regarding his report. “Obviously it’s not going to be the future, so a less leveraged, more stable economic activity out of this sector will still be important for the state’s economy and it’s certainly something that we should welcome. We don’t want to lose that as a key part of our economy. We just can’t depend on it to give us the outsized gains that we had in more recent years.”
DiNapoli is looking for more oversight of how bonuses are funded now that public dollars are helping to keep Wall Street banks afloat.
“We need Wall Street to continue to be a vibrant industry in our state’s economy, but what I think it speaks to is ultimately we need more accountability,” he said. “We need more transparency, especially if federal money is being accessed — taxpayer money — to stabilize these institutions.