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Speaker 1: Bloomberg Audio Studios.
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Speaker 2: Podcasts.
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Speaker 1: Radio.
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Speaker 2: News. Now, changing gears here, we welcome now our Bloomberg TV audience and radio listeners. New York State Comptroller Thomas DiNapoli is with us on his latest report on New York City's security industry and Wall Street's bumper year. Tom, thank you so much for joining in. What a bumper year it is. If the pace continues, $ 90 billion, a record haul, obviously great for New York City and New York State. Yes. As that record haul comes in, I wonder how you're viewing it. Is this sustainable fundamentals for the banking sector and thus something to celebrate? Or are you concerned that it's something being driven by just temporary volatility, especially around AI?
00:00:48
Speaker 1: Certainly money is being made from volatility. And you're absolutely right. AI is fueling a great deal of the activity, the debt issuance. We also see a lot of activity, merchant acquisitions, IPOs. and just general trading. How long this will last, we don't know, but for now, certainly to have first-of-the-year profits over 50% ahead of last year. And as you point out, we project if the trend holds, by the end of the year, it could be a real record year, $ 90 billion in profits from the securities industry in New York City. We track this because of the impact on tax revenue for New York City and for New York State. And when Wall Street does well, our state budget, our city budget benefits helps fund all the other programs that New Yorkers care about. There's a lot going on, a lot of uncertainty out there, but at least for now, the volatility, the geopolitical dynamic is not hurting Wall Street's ability to turn a profit.
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Speaker 2: Just with that, so if we get into the numbers, Tom, so state tax receipts from the industry, $ 26. 3 billion. That actually trails the record, even though the record is setting a new record. Why are state tax collections lagging behind the historic profit that Wall Street is seeing?
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Speaker 1: Well, those are still very, very strong numbers. I wouldn't minimize that. In fact, as a percentage of tax revenue to the state, you're talking about this one sector of the economy contributing about 21% of our tax revenue. That percentage, in terms of the overall tax revenue, has actually gone higher in recent years. So, I think it's still a good news story as far as the tax revenue.
00:02:28
Speaker 2: Well, I guess, Tom, part of the reason I ask that is just about the overall environment and what we've seen from this federal government. To get specific about it, has the One Big Beautiful Bill changed things in terms of just what you would have been collecting in the past?
00:02:43
Speaker 1: We haven't done an analysis of that. It's probably an interesting question for us to look at. But, you know, for now, what's very good is that it's not only the profits that we're talking about right now. This also, if this trend continues, you're probably going to see a record increase in the bonus pool for next year. Those numbers won't come out until next March. which is just around the time the state budget is being finalized. So when you consider the fact that, for instance, New York City had been planning on the bonus numbers to go down, there's a tremendous upside on the revenue picture for the city and for the state as well. Because, you know, the budgets are based on projections, right? So the state had projected... an increase in terms of profits and certainly the bonus pool as well. But we're seeing bigger numbers than we had anticipated. So again, things could change by December 31st, but at the pace we're going, there's a tremendous upside in terms of tax revenue for the city and for the state.
00:03:39
Speaker 2: The numbers are great, and I'm sure Wall Street and their workers who are seeing those bonuses are quite elated. Still, though, there's this regulatory and tax friction that I think remains top of mind for a lot of financial executives, specifically around New York City and Mayor Mom Donnie. How would you say the relationship between the mayor and this industry is taking form? What are bank CEOs telling you behind closed doors about working with City Hall?
00:04:05
Speaker 1: Well, you know, look, it's still a relatively new administration. So I think it'd be fair to say the jury is still out in terms of long term what the relationship will be. You know, the good news is New York City continues to be the global capital for finance. We've actually been adding jobs in the security sector over the past couple of years, contrary to what a lot of people have been assuming. The security jobs located in New York City, it's still more than any other city, New York more than any other state. So this is still a very, very strong part of our city economy, obviously our state economy as well. New York is still the place that people want to be. It's where talent wants to be. I don't think that's changed with the new administration. How that relationship plays out long-term, I'll leave that to the mayor and those executives to work out. But I think certainly from what I'm seeing in terms of the numbers, New York is still a great place for the securities industry to be headquartered and to be making money.
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Speaker 2: About 5,300 security jobs being added to New York this year. Tom, do you then just disregard Goldman's move to open a new headquarters in Texas for Apollo also to go to the same state as well? Do those types of moves not concern you?
00:05:22
Speaker 1: I certainly don't disregard it. But look, populations are shifting, wealth is shifting. But again, let's not understate it. We are adding jobs in New York in this industry. So while jobs may be growing in other places, they start from a much lower base. So, the fact that we are continuing to have our base, and in fact, those numbers are increasing, that is a good news story, and I think sometimes it gets lost. No disrespect to folks that want to be in Texas. Utah had a huge percentage increase in jobs, but Utah started from a very low base. So, yeah, we don't want anybody to relocate anywhere else, but we don't control all of that. The good news is New York is still the place to be, and we're growing jobs here as well.
00:06:05
Speaker 2: Tom, again, there's this concern just about fragility of the growth, if a lot of it is centering around AI. And at the same time, the governor is proposing a plan to spend $ 1 billion on rebate checks of up to $ 200 or more to about $ 8 million. New Yorkers around utilities, and I wonder what you make of that plan. Is this now a time where those types of rebates can be handed to New Yorkers, or does more care need to be taken, just given, yes, a growing New York City economy, but one that is very concentrated in a certain industry around finance and AI specifically?
00:06:40
Speaker 1: Yeah, yeah. No, you're right about the AI concentration of concern. And New York's economy statewide has certainly diversified in recent years. Well, the good news is our tax revenue has been coming in higher than projected. I'm sure part of that is because of the strength of this part of the economy. Look, a lot of folks are making money on Wall Street. A lot of folks in New York, New Yorkers are really struggling. And one of the big impacts has been the high cost of utilities. And what the governor and the legislature made a policy decision on, and there was the money to do it, is to try to relieve some of that pressure on everyday hardworking New Yorkers by having those rebates. That's a policy choice that they made, but this is one of our challenges in New York. We're like a tale of two cities, right? We have folks doing really, really well on Wall Street, outsized income, big bonuses will come out next year, and yet most New Yorkers are really struggling just to continue to pay the household bill month to month. So that rebate strategy is an effort to relieve some of that pressure.
00:07:36
Speaker 2: Tom, only a few minutes left here, but can you say more about the concern about concentration around AI? Only about a minute here. Does that concern you?
00:07:45
Speaker 1: Yeah, look, it's a concern. We can't control it, but look, for now, we're benefiting from it. Whether this really is a bubble that's about to burst or not, you know, nobody knows. You could speculate all you want.
00:07:57
Speaker 2: But is that going to be a problem for New York if it is, if it's a bubble that bursts?
00:08:01
Speaker 1: Any bubble. Look, when the dot-com bubble burst, that was a problem for New York. You know, when COVID had a close down, when the global financial crisis hit, and these cycles happened. So that's why, as an investor, our pension fund, we're very diversified. We're not just relying on what's happening on the stock market.
00:08:15
Speaker 2: Tom, really appreciate your time this morning. That is the New York State Comptroller, Thomas DiNapoli.
Speaker 1: Bloomberg Audio Studios.
00:00:04
Speaker 2: Podcasts.
00:00:05
Speaker 1: Radio.
00:00:06
Speaker 2: News. Now, changing gears here, we welcome now our Bloomberg TV audience and radio listeners. New York State Comptroller Thomas DiNapoli is with us on his latest report on New York City's security industry and Wall Street's bumper year. Tom, thank you so much for joining in. What a bumper year it is. If the pace continues, $ 90 billion, a record haul, obviously great for New York City and New York State. Yes. As that record haul comes in, I wonder how you're viewing it. Is this sustainable fundamentals for the banking sector and thus something to celebrate? Or are you concerned that it's something being driven by just temporary volatility, especially around AI?
00:00:48
Speaker 1: Certainly money is being made from volatility. And you're absolutely right. AI is fueling a great deal of the activity, the debt issuance. We also see a lot of activity, merchant acquisitions, IPOs. and just general trading. How long this will last, we don't know, but for now, certainly to have first-of-the-year profits over 50% ahead of last year. And as you point out, we project if the trend holds, by the end of the year, it could be a real record year, $ 90 billion in profits from the securities industry in New York City. We track this because of the impact on tax revenue for New York City and for New York State. And when Wall Street does well, our state budget, our city budget benefits helps fund all the other programs that New Yorkers care about. There's a lot going on, a lot of uncertainty out there, but at least for now, the volatility, the geopolitical dynamic is not hurting Wall Street's ability to turn a profit.
00:01:47
Speaker 2: Just with that, so if we get into the numbers, Tom, so state tax receipts from the industry, $ 26. 3 billion. That actually trails the record, even though the record is setting a new record. Why are state tax collections lagging behind the historic profit that Wall Street is seeing?
00:02:07
Speaker 1: Well, those are still very, very strong numbers. I wouldn't minimize that. In fact, as a percentage of tax revenue to the state, you're talking about this one sector of the economy contributing about 21% of our tax revenue. That percentage, in terms of the overall tax revenue, has actually gone higher in recent years. So, I think it's still a good news story as far as the tax revenue.
00:02:28
Speaker 2: Well, I guess, Tom, part of the reason I ask that is just about the overall environment and what we've seen from this federal government. To get specific about it, has the One Big Beautiful Bill changed things in terms of just what you would have been collecting in the past?
00:02:43
Speaker 1: We haven't done an analysis of that. It's probably an interesting question for us to look at. But, you know, for now, what's very good is that it's not only the profits that we're talking about right now. This also, if this trend continues, you're probably going to see a record increase in the bonus pool for next year. Those numbers won't come out until next March. which is just around the time the state budget is being finalized. So when you consider the fact that, for instance, New York City had been planning on the bonus numbers to go down, there's a tremendous upside on the revenue picture for the city and for the state as well. Because, you know, the budgets are based on projections, right? So the state had projected... an increase in terms of profits and certainly the bonus pool as well. But we're seeing bigger numbers than we had anticipated. So again, things could change by December 31st, but at the pace we're going, there's a tremendous upside in terms of tax revenue for the city and for the state.
00:03:39
Speaker 2: The numbers are great, and I'm sure Wall Street and their workers who are seeing those bonuses are quite elated. Still, though, there's this regulatory and tax friction that I think remains top of mind for a lot of financial executives, specifically around New York City and Mayor Mom Donnie. How would you say the relationship between the mayor and this industry is taking form? What are bank CEOs telling you behind closed doors about working with City Hall?
00:04:05
Speaker 1: Well, you know, look, it's still a relatively new administration. So I think it'd be fair to say the jury is still out in terms of long term what the relationship will be. You know, the good news is New York City continues to be the global capital for finance. We've actually been adding jobs in the security sector over the past couple of years, contrary to what a lot of people have been assuming. The security jobs located in New York City, it's still more than any other city, New York more than any other state. So this is still a very, very strong part of our city economy, obviously our state economy as well. New York is still the place that people want to be. It's where talent wants to be. I don't think that's changed with the new administration. How that relationship plays out long-term, I'll leave that to the mayor and those executives to work out. But I think certainly from what I'm seeing in terms of the numbers, New York is still a great place for the securities industry to be headquartered and to be making money.
00:05:02
Speaker 2: About 5,300 security jobs being added to New York this year. Tom, do you then just disregard Goldman's move to open a new headquarters in Texas for Apollo also to go to the same state as well? Do those types of moves not concern you?
00:05:22
Speaker 1: I certainly don't disregard it. But look, populations are shifting, wealth is shifting. But again, let's not understate it. We are adding jobs in New York in this industry. So while jobs may be growing in other places, they start from a much lower base. So, the fact that we are continuing to have our base, and in fact, those numbers are increasing, that is a good news story, and I think sometimes it gets lost. No disrespect to folks that want to be in Texas. Utah had a huge percentage increase in jobs, but Utah started from a very low base. So, yeah, we don't want anybody to relocate anywhere else, but we don't control all of that. The good news is New York is still the place to be, and we're growing jobs here as well.
00:06:05
Speaker 2: Tom, again, there's this concern just about fragility of the growth, if a lot of it is centering around AI. And at the same time, the governor is proposing a plan to spend $ 1 billion on rebate checks of up to $ 200 or more to about $ 8 million. New Yorkers around utilities, and I wonder what you make of that plan. Is this now a time where those types of rebates can be handed to New Yorkers, or does more care need to be taken, just given, yes, a growing New York City economy, but one that is very concentrated in a certain industry around finance and AI specifically?
00:06:40
Speaker 1: Yeah, yeah. No, you're right about the AI concentration of concern. And New York's economy statewide has certainly diversified in recent years. Well, the good news is our tax revenue has been coming in higher than projected. I'm sure part of that is because of the strength of this part of the economy. Look, a lot of folks are making money on Wall Street. A lot of folks in New York, New Yorkers are really struggling. And one of the big impacts has been the high cost of utilities. And what the governor and the legislature made a policy decision on, and there was the money to do it, is to try to relieve some of that pressure on everyday hardworking New Yorkers by having those rebates. That's a policy choice that they made, but this is one of our challenges in New York. We're like a tale of two cities, right? We have folks doing really, really well on Wall Street, outsized income, big bonuses will come out next year, and yet most New Yorkers are really struggling just to continue to pay the household bill month to month. So that rebate strategy is an effort to relieve some of that pressure.
00:07:36
Speaker 2: Tom, only a few minutes left here, but can you say more about the concern about concentration around AI? Only about a minute here. Does that concern you?
00:07:45
Speaker 1: Yeah, look, it's a concern. We can't control it, but look, for now, we're benefiting from it. Whether this really is a bubble that's about to burst or not, you know, nobody knows. You could speculate all you want.
00:07:57
Speaker 2: But is that going to be a problem for New York if it is, if it's a bubble that bursts?
00:08:01
Speaker 1: Any bubble. Look, when the dot-com bubble burst, that was a problem for New York. You know, when COVID had a close down, when the global financial crisis hit, and these cycles happened. So that's why, as an investor, our pension fund, we're very diversified. We're not just relying on what's happening on the stock market.
00:08:15
Speaker 2: Tom, really appreciate your time this morning. That is the New York State Comptroller, Thomas DiNapoli.
