As E.J. notes in the post below this one, Gov. Paterson says he thinks Wall Street bonuses could be down as much as 60 percent, higher than his budget office’s expected 43 percent decline.

To put this estimate in perspective: after the tech bubble bust and the 9/11 attacks, Wall Street bonuses were down 33 percent from 2000 levels in 2001 and down an additional 25 percent in 2002. In 1988, after the ’87 crash, they were down 23 percent.

Paterson’s intuition is borne out by some numbers, though. (Warning: scary.) 

According to Wednesdays’s Wall Street Journal, citing ThomsonReuters data, the bread and butter businesses of global finance had all plummeted in 2008 through the end of September, compared to last year’s levels. Global stock and bond underwriting was down 36 percent. Fees from such business were down 41 percent.

The Securities Industry and Financial Markets Assocation has some US-specific numbers, and, although they haven’t released full third-quarter figures yet, they’re already ugly.

Through August, total US-based equity and debt underwritings were down 57 percent, with debt issuances falling by 62 percent. Leading the way were issuances of mortgages not backed by any government agency, down 93 percent, followed by IPO business, down 84 percent, and issuances of all types of asset-backed debt, down 80 percent. The only business doing well on the corporate side was the issuance of preferred stock, which nearly doubled, largely due to financial companies’ expensively trying to shore up their own internal finances. On the municipal-bond side, business was up 2 percent for the first eight months of the year, but numbers for September are likely to be bad.

History isn’t comforting here. Between 2000 and 2001, overall debt and equity underwriting was actually up. And between 2001 and 2002, it declined just 4 percent before resuming its increases again. Between 1987 and 1988, overall underwriting business fell by 10 percent, and continued to fall by 18 percent and 1 percent over the following two years.

New York City and State should brace for something that exceeds the worst of both of these worlds: sharply lower business volumes that persist for several years running.

You may also like

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Emergency Billions Pose Opportunity—and Risk—for NYS Schools

New York schools are to post publicly today plans for spending a huge pile of unexpected and unbudgeted cash. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Empire State’s new budget is a bridge to nowhere

Looking ahead to an uncertain post-pandemic recovery, New York’s newly enacted state budget for fiscal year 2022 raises spending by staggering amounts that—barring an unlikely rapid return to peak 2019 economic activity in New York City—can't possibly be sustained for more than a few years. The budget is a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink. Read More

Schumer’s First Spending Bill as Majority Leader Tailors Money for New York Medicaid

The pandemic relief bill includes a boost in Medicaid funding that appears to be tailor-made for Senate Majority Leader Chuck Schumer. Read More

A Letter From Washington Shrinks New York’s Budget Gap by $2 Billion or More

In a letter to governors two days after President Biden's inauguration, the U.S. Department of Health and Human Services said that the pandemic-related federal public health emergency "will likely remain in place for the entirety of 2021." Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!