Banking: Wall Street bonuses fall more sharply than in any year since 2008. Policy makers mull the economic impact.

by | Mar 31, 2023 | Stock Market

Wall Street bonuses fell 26% in 2022, the largest drop since the collapse of Lehman Brothers in 2008, as New York state and city officials dial back their expectations for the economic impact of the securities industry. While many people bemoan the salaries commanded by the Big Apple’s white-shoe bankers, the financial sector provides an economic boost to city and state budgets, helping to find public services that touch the lives of residents.

Now, with the banking sector absorbing the impact of the collapse of Silicon Valley Bank and Signature Bank in recent weeks and of a lack of investment-bank deal making, 2023 isn’t looking particularly strong. The current malaise may signal what’s in store for bonuses and employment at year-end. Rahul Jain, the state’s deputy comptroller, said state and city official are baking in conservative projections for a decline in Wall Street profits and bonuses in 2023 partly because so much remains unknown, such as when the Fed will pause its interest-rate hikes or possibly reverse gears and cut rates. “What we can’t tell is what the Fed will do with interest rates,” Jain told MarketWatch. “It doesn’t seem like we’ll return to the levels of 2020 and 2021, but there’s hope that 2023 will level off near 2022.” While Wall Street and the banking sector is challenged, the overall economy remains relativ …

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