Wall Street bonus average falls to $101K

Bring out the violins. The average Wall Street bonus will come in at just $101,000 this year.

That's the estimate of State Comptroller Thomas DiNapoli, according to the New York Post. And while it seems like an incredible amount to most of us, it's actually a 16.5% drop from last year and nearly a 50% drop from the high-rolling days of 2006.

Some traders are waiting out these lean years in hopes of a return to the golden days. After all, Wall Street is more adept at making bundles of cash than just about anyone. It's well-positioned to capitalize on an economic recovery.

But others think Wall Street will never get back to those days of huge bonuses and thousand-dollar meals billed to the company expense account. "I don't believe the typical bonuses, as we used to know them, exist anymore," the CEO of one investment group, Shaffer Asset Management, told the Post.

Why the big banks being so tight-fisted? Four reasons:

1. The fiscal cliff. Although it appears that lawmakers are heading to some kind of solution, there is still too much up in the air. Wall Street has no clue what will happen after Jan. 1, and bankers are worried about what impact the fiscal cliff, with its significant tax increases and spending cuts, will have on the economy's growth.

2. The Federal Reserve. As Operation Twist expires, will the Fed move to another round of quantitative easing?

3. Europe. The neverending drama has impacted Wall Street all year as traders wait nervously for developments in the European debt crisis. This weekend, Italian prime minister Mario Monti said he would resign after the 2013 budget is approved.

4. Lower returns. A market downturn has made it much harder for banks to make money. The banking industry's return on equity slid to 7.6% in 2011 from 8.4% in 2010, Bloomberg reports. The average cost of that equity is around 10% to 12%.

All of those issues are creating uncertainty, which is Public Enemy No. 1 for Wall Street. And until banks feel a little more sure about what's going on, the spigot of bonus cash will be turned down.

The workforce is getting trimmed as well. Citigroup (C) is cutting 11,000 positions across the board, while UBS is getting out of fixed-income trading altogether. The Wall Street Journal reports that investment-banking and trading revenue at the 10 largest banks may only rise by 2.8% this year to $148 billion. That's a 32% drop from 2009 and a 13% drop from 2010.

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