Wall Street Prepares For Over 100,000 Layoffs
Six digits on Wall Street usually has a very different meaning. This fall, the country's financial firms could lay off more than 100,000 workers in a wave of belt-tightening, reports say. Leading the charge have been the widely noted cuts to be put in place at Bank of America. The bank is set to implement the largest single job reduction throughout the country this year, according to the AP. (The reductions are to start now, and will continue to materialize through 2014).
In total, some 30,000 BofA jobs are expected to be eliminated this fall, which would follow a slashing of 6,000 jobs from earlier this year. The moves are being made to try and shore up investor confidence in the face of a halving of the bank's market value earlier this year. That assessment stems from soured mortgage investments and the belief that the bank isn't on a sure enough footing to withstand new shocks.
But BofA's cuts are a mere taste of what's to come on the Street. Banks are said to be slimming their rolls for a pair of reasons. For starters, they are responding to a rise in recession outlooks, according to Business Insider. But they are also adjusting to a new finance reality as Dodd-Frank regulations are phased in. Those regulations mandate that banks keep more capital on hand to preclude the need for government bailouts. And so, as a result, the banks are no longer allowed to leverage the same amount of money to place the highest bets possible, spelling doom for the trading desks.
As proof that the moves are being made for the bottom line and not for reasons related to individual competence, the banks are telling their employees now, and providing them with an expiration date of Oct. 1. The extra cushion is being created so that the bankers can apply for new jobs while still working, as opposed to applying from the unemployment line. This standing should enhance their applications.
Of all the cuts being made, perhaps the round of greatest interest to Wall Street analysts and employees are the ones being made at Goldman Sachs. As was reported on AOL Jobs earlier this summer, the famed bank is looking to cut $1.24 million in costs over the next year. A part of that drive is the excising of premier banking jobs, in divisions like equities, that have long been the prize of the finance world. But Goldman is not just cutting as it embarks on a period of restructuring. Instead, it will be adding 1,000 new jobs in Singapore, and then growing its Brazilian workforce by 20 percent with the addition of roughly a hundred new finance spots. The moves are being made as a response to the new regulations, but also as an attempt to keep pace with future trends in finance.
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Dan Fastenberg was most recently a reporter with TIME Magazine. Previously, he was a writer for the Thomson Reuters news service's Latin America desk. He was also a reporter and associate editor for the Buenos Aires Herald while living in South America.
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