Where Wall Street IS Main Street

by Isaac-Davy Aronson

President Obama got a bit agitated today over a report showing that, as the economy teetered and the government pumped billions of taxpayer dollars into the ailing financial industry, Wall Street firms doled out $18 billion in bonuses last year. With his treasury secretary, and former New York Fed chief, Tim Geithner beside him at the White House, Obama told reporters:

"That is the height of irresponsibility. It is shameful. And part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility."

The report in question was issued yesterday by New York Comptroller Tom DiNapoli, and WNYC reported on it then. But we were looking at the report from a different angle: Wall Street bonuses are down 44 percent from the previous year...and while 2008 still boasted the 6th-largest dollar amount of bonuses ever given out, the drop is the largest year-to-year drop in dollars ever, and the largest percentage drop in bonuses in 30 years.

DiNapoli projects New York State will lose $1 billion in tax revenue, and New York City will lose $275 million.

Business and personal income-tax collections from Wall Street activities have accounted for up to 20 percent of state tax revenues and 12 percent of New York City tax revenues; Governor Paterson has repeatedly pointed to the collapse of Wall Street as a main culprit in the state's fiscal crisis. And DiNapoli's report, along with Obama's response, illustrate New York's unique experience of the financial crisis. While Obama and taxpayers around the nation may be justifiably vexed by Wall Street firms spending bailout money on bonuses, one could argue that more bonuses would be a boon to New Yorkers across the state who depend on services financed by taxes.

Reached this evening, DiNapoli acknowledged the contradictory economic pressures but said taxpayers have every right to upset about what they see as poor management of their money:

DiNapoli says he appreciates Obama's comments, and he hopes they mean the President is serious about better federal oversight of bailout money for the financial industry.