NEW YORK (

TheStreet

) -- Wall Street profits are set to decline 69% this year, according to the New York State Comptroller, as the financial industry adjusts to the new regulatory environment and ongoing economic headwinds.

Big banks and securities firms are on pace to earn $19 billion in 2010, far below the $61.4 billion profit posted the previous year. Although 2010 will still be the fourth-most-profitable year on record, the comptroller's office said last year's groundbreaking results "are not likely to be repeated anytime soon."

>>>See Earlier Coverage: Big Bonuses Still Flow on Street

"Wall Street is adjusting to regulatory reforms and learning how to do business in the new financial reality," the comptroller, Thomas P. DiNapoli, said in a statement. "These actions may trim profits and cash bonuses in the near term, but they are necessary in order to encourage long-term stability and profitability. As long as other international financial centers play by similar rules, Wall Street should retain its leadership position."

Bonuses, too, are on the decline - both because of lay-offs and changes to compensation policies ithat began last year. In 2009, Wall Street paid out $20.3 billion in bonuses, representing 40% of revenue, vs. a typical payout of 50% in previous years.

This year, DiNapoli's office expects bonuses to decline by 28.5% to $14.5 billion, the largest decline in at least 30 years.

The change comes as big banks including

Morgan Stanley

(MS) - Get Report

,

Goldman Sachs

(GS) - Get Report

,

Bank of America

(BAC) - Get Report

,

Citigroup

(C) - Get Report

and

American International Group

(AIG) - Get Report

made significant changes to compensation incentives at the urging of the Obama administration's pay czar, Kenneth Feinberg.

More compensation has been moved into restricted stock units and non-cash awards, some with clawback provisions.

-- Written by Lauren Tara LaCapra in New York

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