Wall Street is already selecting the biggest losers.
They’re the largest class in a long time of shell-shocked traders, bankers and investment staff to forfeit or see sharply reduced year-end bonuses.
The financial spiral could send overall 2012 bonuses down as much as 20 percent from a year ago, as industry profits are forecast to plunge by more than one-third from last year, The Post has learned.
The echo will reverberate across many tony towns.
Thousands of Wall Street’s best and brightest, used to high-six-figure to multimillion-dollar pay awards each year, will be canceling country-club memberships and putting on hold plans for beachfront property in the Hamptons.
Last year, the typical Wall Street big’s salary with bonus was $360,700, according to New York state Comptroller Thomas DiNapoli. Bonuses often account for the lion’s share of a Street pro’s compensation.
The losers this year include fixed-income, currency and commodity traders. Their bonuses could be down as much as 15 percent, according to compensation consultant Johnson Associates.
There’s also downward bonus pressure on high-frequency traders, who until recently were viewed as an electrifying profit center. In better times, a good high-frequency pro can rake in $1 million with a bonus each year.
“We have not touched high-frequency — it’s pretty dead, given the lack of volatility,” said New York-based headhunter Kyle Ramkissoon. “In fact, most high-frequency trading firms have been cutting staff and finding it difficult to eke out profits.”
Many are blaming Uncle Sam.
“The Fed is not helping the bonus situation,” fumed Dan Shaffer, CEO of Shaffer Asset Management, citing monetary policies and punitive regulatory sanctions.
“The Federal Reserve has dislocated the markets — trying to keep volatility low so people will think it is safe to go into the stock market,” he added. “But with low volatility, Wall Street firms don’t make a lot of money.”
Shaffer also blasted regulators for extracting billions from the industry in record fines.
“They are going after them like a piggy bank to collect money,” he said. “It’s a joke.”
Shaffer thinks overall bonuses could drop by one-fifth from last year.
DiNapoli believes the enormous regulatory fines are cannibalizing the Street’s profits. “Without casting judgment on regulators, the level of fines and litigation is eating into profits,” DiNapoli told The Post last week. “That obviously is having very direct impact on banks’ bottom line.”
In his latest report on profitability at NYSE member firms, DiNapoli forecast 2013 profits of $15 billion, a big decline from last year’s $24 billion. Meanwhile, Goldman Sachs and six of its largest US and European competitors have set aside a combined 39 percent of revenue for employee compensation in the first nine months of this year. That’s down from 42 percent a year ago, according to a Bloomberg report.
A September survey by website eFinancialCareers found that only 42 percent of Wall Street employees are expecting a bigger bonus this year, compared with 48 percent a year ago.