Dirty GOP Tricks: BoA Fires 16,000 In Latest Round Of Wall Street Layoffs
As the GOP dubbed ‘Economy Election’ nears Bank of America fires 16,000 in the latest round of numerous layoffs announced by Wall Street firms.
The Wall Street Megabank has become the latest corporation to announce massive layoffs are coming by the end of the year stating 16,000 imminent terminations are coming by the end of the year.
I find it highly suspect that in the middle of the economy supposedly recovering so many corporations are now announcing lay-offs right before the elections.
But why now?
On thing is for sure, the unemployment rate will certainly spike which will reflect bad on President Obama.
Another thing that is certain is that this tidal wave of layoffs come as conservative news outlets such as Fox news and Bloomberg have stopped calling it the election and instead repeatedly refer to this year’s election as the “economy election”
While I am not surprised that Fox News would use this tactic to try to bolster support from Romney I was surprised to see normally objective Bloomberg reporter’s use the term and even more surprised to see it being used on their overseas UK and Asia editions.
To qualify that, Bloomberg certainly has some reporters that are outright GOP rags but for the most part most of their reporters mainly political neutrality.
In any case, it is an coincidence that we are see massive layoffs being announced by numerous Wall Street companies right ahead of the elections when for all intents and purpose the economy appeared to be on a path to a slow but steady recovery.
Headlines about layoffs just keep coming across the ticker. For example a quick Google news search for stories about layoffs in just the last 24 hours returns:
- 1267 mass layoff events for August resulting in 127,454 initial unemployment claims
- American Airlines to sends layoff notices to 11,000 workers.
- Vestas laid off 3700 workers
- Lockheed to layoff 1.5% or 325 training, missile workers
- Siemens to layoff 615 people (although this article says 945).
- First Energy to layoff 200 workers.
- Space Systems/Loral laying of 90 workers.
- Warm Springs laying off 93 workers.
- Clipper Windpower, to cutt staff by a third, to 376 from 550
- Layoff rumors swirl around Deutsche bank layoffs.
- DMI Industries to layoff 167 workers
- SVTC Technologies to layoff 105.
- Ford laying off 70 at Oakville plant.
- Two coal mines laying off 116.
- Allonhill lays off 325 people.
- Liquidnet to layoff 30 people
Zero Hedge has more on the announcement from Bank of America
Curious why nearly 4 years ago to the day Ben Bernanke and Hank Paulson told Ken Lewis to purchase Merrill Lynch “or else” (but to make sure everyone gets paid their bonuses bright and early with no cuts)? It certainly had to do with the stock price and preserving the wealth of the shareholders. It had little to do with making the company viable in the long run, unfortunately, as the just announced news of amassive tsunami of 16,000 imminent terminations at the company confirms. All BofA did then was to take on dead weight at gunpoint, which it now has to shed. It also shows that despite rumors to the contrary the US economy isnot getting better, the US financial system is not getting stronger, faith in capital markets is not returning (based on future staffing needs at banks), US tax revenues by the highest earners will go down, and the closed loop that is a procyclical economic move will just get worse as there are fewer service providers providing financial services, in the process taking out less consumer debt to keep the GDP “growing.” What will also happen by January 1, 2013 is that BofA will no longer be America’s largest employer, with the total headcount of 260,000 at year end being the lowest since 2008, and smaller than JPM, Citi and Wells.
Charting the sad decline of the very appropriately named bank:
From the WSJ:
The reductions for the final six months of the year, outlined in a document given to top management, are part of a larger effort to retool Bank of America into a leaner and more focused enterprise. The plan is designed to make the company take less risk, generate more revenue out of existing customers and use an investment banking operation inherited from Merrill Lynch & Co. to become a major deal maker around the world.
On Main Street, the refocused company will have fewer branches and a smaller mortgage operation, the document shows.
Chief Executive Brian Moynihan is trying to speed the company’s transformation into a smaller and more efficient operation as he tries to persuade investors that expenses can be adjusted to compensate for revenue lost to new regulations, an uneven economy and shaky markets. Since becoming CEO in 2010, he has shifted away from a nationwide expansion strategy embraced by his predecessors Hugh L. McColl Jr. and Kenneth D. Lewis, and shed many of the businesses that he considers to be nonessential.
Hitting the new staffing target would fulfill a year early Mr. Moynihan’s pledge to slash the bank’s workforce by approximately 30,000.
“If they want to make any headway toward improving profitability,” said Sterne Agee & Leach Inc. senior banking analyst Todd Hagerman, “they need to accelerate the timeline.”
In the run-up to the financial crisis, Bank of America’s staff rolls ballooned as the company acquired rival financial institutions and pushed into every corner of the financial system, culminating in the 2009 purchase of Merrill Lynch.
But the 2008 acquisition of Countrywide Financial Corp. turned Bank of America into a huge mortgage lender just as the U.S. housing market collapsed, and left the company more exposed to any other major bank to the severe economic downturn that followed.
While most of the cuts are expected to come from the side of the bank that deals with Main Street, according to the document provided to management, the company has also culled some of its less-experienced investment bankers.
Through the end of the second quarter, Bank of America had reduced the ranks of junior investment bankers by 23% since September 2011, according to the document.
So while BAC shareholders may be happy for a few hours as even more costs are shed (even if at the expense of future revenues), the biggest loser is once again the US taxpayer, as 16,000 taxpayers (from the highest tax bracket) no longer pony up for the “common good.” One day, though, we are certain that BofA will do everything in its power to repay the Treasury and taxpayers for the fact that it is even still around. Just not yet.
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