Bank Of America Cutting 5% Of Capital Markets' Personnel, Firing 400 Employees Globally, Many More To Come...Er... Go
The much anticipated "low volume market" casualties are accumulating. As we noted first a few weeks ago, and subsequently picked up by other MSM publications, it was only a matter of time before Wall Street, which earlier in 2010 decided to foolishly lever up on the economic "reflation" myth and hire tons of people, is once again preparing to fire in droves, a phenomenon which traditionally is the best indicator a given economic cycle's peak has come and gone. Bloomberg has just disclosed that Bank of America is following similar actions from RBS disclosed earlier, and is firing as many as 400 employees in global banking and markets division. Charlie Gasparino, who first broke the news, also added the twist that the departures are taking place now "so as to deprive the unlucky employees year-end bonuses." Gotta love Wall Street's code of ethics. At least in the past layoffs would wait until after year end. No such luck anymore, now that most other banks are also likely considering comparable steps, and news of terminations start flooding in.
Of course, the simple fix to this development is to have market volumes pick up, which however, in the most beautiful Catch 22 ever, won't occur until the markets continue to be gamed and manipulated, as confirmed by this coming Wednesday's announcement of the 20th consecutive outflow from domestic mutual funds, and the fact that artificially high levels in the market are merely a springboard for insiders to offload their own shares of stock, and to lie to retirement plan participants that they have capital stashed away for the future. In other words, as more and more manipulation prevails, less and less bankers will be left. Indeed, this is self-cannibalization at its most beautiful. Eventually, the balance will return, but likely not before the entire economy itself is put into a hard reset mode.
As for BofA's firings, here is some more from Gasparino:
Bank of America appears to be the first major financial firm to start cutting jobs as a growing number of analysts predict a Wall Street profit slowdown will pick up steam for the rest of the year, FOX Business has learned.
Though the cuts are said to be modest in size — around 5%, and only in certain profit-challenged areas of the bank’s capital markets unit — the move to trim jobs by capital markets chief Tom Montag is seen as significant inside the bank, people close to the matter say.
Montag had been increasing the size of his capital markets staff, which includes bankers and traders, all year. Now, though there’s no official hiring freeze, he’s in the cut-back mode, these people say.
The cuts are expected to be announced this week and will impact trading desks, which have been hardest hit by the recent profit squeeze among the big banks.
And the saddest thing is that those being laid off are likely the hardest working, and lowest paid people in the organization. Unfortunately for them, courtesy of their bosses, they will find little sympathy on Main Street. Maybe they should just report to Obama - rumor is he suddenly is in love with bankers.