Wall Street’s profit may fall 37 percent this year, hurt during the second half by rising interest rates, legal costs and budget turmoil in Washington, New York State Comptroller Thomas DiNapoli said. DiNapoli forecast securities industry earnings at $15 billion in 2013 compared with $23.9 billion the year before, while employment has fallen near a post-recession low.
A drop in profit may crimp bonuses, which reached an estimated $20 billion for 2012, he said. “The political gridlock in Washington may take a bite out of the securities industry’s profits for the fourth quarter,” DiNapoli, 59, said in a statement. “Washington’s inability to resolve budget and fiscal issues is bad for business.”
An impasse over spending and raising the nation’s borrowing limit led to a partial shutdown of U.S. government operations this month, as Republicans in Congress fought with Democrats over paring back Obamacare. The resulting turmoil rocked equities and pushed prices higher in the $4.1 trillion market for federal debt. That may lower earnings in the securities industry, which helps drive the city’s economy, DiNapoli said. “Failure to resolve the federal budget and debt ceiling impasse could disrupt the economy and hurt New York City and New York state,” said DiNapoli, a Democrat. Congress put off both issues with short-term fixes setting new deadlines next year.
For more information - Wall Street Profit May Drop 37% Bitten by Laws, Congress - Bloomberg