Bank Of America Cutting 5% Of Capital Markets' Personnel, Firing 400 Employees Globally, Many More To Come...Er... Go

Tyler Durden's picture

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.

 

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overmedicatedundersexed's picture

Think of how profitable they will be with 50% less staff, no 70%..the stock should soar..I think Munger would be proud..suck it up BOA employees..suck it up.

chet's picture

But... but... these are our best and brightest!  Top talent! 

Oh, won't someone please think of all the lost financial innovation?!

Millennial's picture

This online school I was interested in teach Financial Engineering.

 

I'm sorry but mixing stocks and bonds in various which ways is not engineering.

ZeroPower's picture

An online school? HAHA! Let me guess...was it Uni of Phoenix? Or was it one even less known?

4 words for you: PBS Frontline - College Inc.

Also, you know absolutely ZERO about fin engineering, so your post is cute in attempting to bash it. I suggest you follow through with that liberal arts major at your impeccable institution of online learning.

MichaelG's picture

We're talking portfolio insurance; MBSs; CDSs; CDOs; CDO^2s; CDO^3s; the assignment of Aaa ratings to vast swathes of same; and generally 'managing' aka creating risk, no?  I think it pretty much bashes itself.  The pattern seems always the same - some bright sparks get an idea which works brilliantly whilst only they are using it, before everyone (some not-so-bright, by definition) leaps aboard the gravy train, and proceeds to go full-retard ahead of nearly bringing down the entire financial system.

ZeroPower's picture

Yes, innovations of the last decade, sure.

However, going back, we have CAPM, Byron-Scholes, ARCH/GARCH, Brownian Motion, Ito's Lemma etc etc..

All things that a spreadsheet will export for you effortlessly, however it had to be developed/studied/understood at some point. Which is why simply 'discounting' fin engineering for being a disaster to humanity is plain wrong.

Rainman's picture

........also don't neglect to borrow more cheap green from the Fed , retire millions of common shares and watch BAC sooooooar even  MO !!

cowdiddly's picture

coming to a Wells Fargo near you as as your partners portfolio is packed to the gills with WFC and USB and other bankingstocks. Suck it up Munger, Suck it, UP. Your only mistake is you think this is over. Its only just begun.

unwashedmass's picture

we should all understand that those fired are peasants.....the really elite of the bank are doing just fine, thanks, and reaping the fantastic benefits of the market manipulation.

and, at the end of the day, if real trading should ever resume, well, hell, they can hire peasants back at half of what they are paying them today, right, Jamie?

unwashedmass's picture

we should all understand that those fired are peasants.....the really elite of the bank are doing just fine, thanks, and reaping the fantastic benefits of the market manipulation.

and, at the end of the day, if real trading should ever resume, well, hell, they can hire peasants back at half of what they are paying them today, right, Jamie?

Getagrip's picture

Don't need people if you have machines...

Sudden Debt's picture

FIRE THEM ALL I SAY!!! FOODSTAMPS FOR ALL!!

Segestan's picture

Bullish!... Oh, I quess they never got the memo?

pamriallc's picture

breaking down silo's means more merger-related cleansing.  this means regardless of the economy, these SMERGED banks will cut employees.  sorry guys.... that's because you don't need 2-3 of everything when all of these mergers occur.   shawn mesaros, pamria, llc

BORT's picture

When times are good, the talk is all of team and teamwork and"we all benefit when the whole team works well together".  When time gets tough, management falls back upon the appeal to those in the bonus pool that if we don't do this, your bonus will suffer, or we won't hit the number, etc.  That is how they use the money to makes whores of all, and it hurts the company forever.  The US businesses have done this for long enough now for people to say screw you, I don't trust you anymore.  The US is in for a huge reset

BORT's picture

When times are good, the talk is all of team and teamwork and"we all benefit when the whole team works well together".  When time gets tough, management falls back upon the appeal to those in the bonus pool that if we don't do this, your bonus will suffer, or we won't hit the number, etc.  That is how they use the money to makes whores of all, and it hurts the company forever.  The US businesses have done this for long enough now for people to say screw you, I don't trust you anymore.  The US is in for a huge reset

HarryWanger's picture

Seems like a ramp up in layoffs sneaking in these days. Mostly under the radar outside of FedEx or BAC. 

Phat Stax's picture

Now to Thanksgiving is the season....

StychoKiller's picture

A Ramp here, a ramp there, soon you're talking about real movement!

bugs_'s picture

% of pure merrill to pure bac please?  (LOL)

wafflehead's picture

no worries, Nobama will give them a new job in the census department

Village Idiot's picture

BofA always looks out for their own!  Case in point -

Just about the time the mortgage meltdown started rolling, my wife interviewed with one of BofA's production manager's, who, at the time, was operating a nice slice of the nation (5k+ employees).  This person was a fixture in originations - a real producer - everyone loved this person. 

My wife (still gainfully employed at the time) made it through the entire vetting process, which concluded with a celebratory affair, BofA management attending.  This was on a Friday.  My wife was planning on relinquishing her old position that following week.

On the Monday following that celabratory affair, my wife got a call from the person I mention above.  As of that Monday, BofA announced that it was centralizing operations. 

The person who had so loyally and productively served BofA was out of a job!  Needless to say, my wife didn't get her job, either.  But in a strange twist of fate, the person who almost hired my wife now works for my wife.  And she is greatly appreciated.

The beauty of it all is that "corporate" knew all along that the end days were fast approaching and still let everyone go through the motions.  Nice!

 

nonclaim's picture

But how many others are being hired? See, with hedge funds closing down and other consolidations you can get a more qualified person for the same cost or likely lower in this market. The total sum lost is still the same but not all gone from just BAC, which in the end might get a more effective team. This is just a hypothesis, btw, and could apply to any company. Still a hard time for those let go, no question about that.

Village Idiot's picture

"...you can get a more qualified person for the same cost or likely lower in this market. The total sum lost is still the same but not all gone from just BAC, which in the end might get a more effective team."

 

If I am reading you correctly, "better team" and "lower payroll."  It's the new American way.

Budd Fox's picture

Yeah!! And lower incomes will do a lot of good to America...will bost EPS, we can all live just being punters at the rigged casinos...bring it on a wider and wider poverty!

It's the fekkin rotten American dream of our forefathers...ain't it??

nonclaim's picture

I just stated a fact, deflation is what it is. Whether one like it or not is immaterial.

Saxxon's picture

"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."

Self-gnawing ratfuckers; and yes, the remaining employees will just be glad to have a job.  No question mgmt will use the leverage heartlessly.  America is waking up to it.

Village Idiot's picture

...and yes, the remaining employees will just be glad to have a job.  No question mgmt will use the leverage heartlessly.  America is waking up to it.

 

In my industry, mid level back office managers who were making 50K plus performance bonus are now making 40K with no bonus.  And they aren't saying a word about it.  just happy to have a job.  And you can bet those P&L's are being stressed again to see what happens.

Rainman's picture

I have 2 acquaintances who told me a similar story. I really hear the shit when they're getting drunk. Both guys seem to be trapped in a Nazi-like work camp atmosphere.

laughing_swordfish's picture

They're lucky.

In my former industry, the "mid-level back office" management function was outsourced to India - and the worker bee's jobs went to the Phillipines.

Oh I'll tell you - Corporate America Leadership, you are so loved.

There will be special places for you AND YOUR FAMILIES in the tumbrils to the Guillotines....

virgilcaine's picture

Were all hamsters on the wheel, wants to stay on the wheel as long as he can.

Not to make light of the situation but do you really want to look back at life and say I worked at Bank of Amerika?

 

Probably a blessing.

Restcase's picture

When Rothschild quit Wall Street (or was it Water St.?), the way laid off employees found out their status was every morning they would crowd around the Bell Atlantic technician in the lobby who had a clipboard with a list of extentions to disconnect that day. I met that tech in Jeremy's Alehouse or Radio Mexico in 92 or 93 and he said, "It was the only notification they received."

hooligan2009's picture

i think these workers should claim political asylum since they obviously cant be returned back to the labor market from whence they came, as they will be at the least spat at and bullied by neighbors!

Another Q/E mechansim!

Rusty Shorts's picture

Jim Willy says his sources say that Bank of America failed over the weekend, and was covered up by the Fed.

Part1

Part2

Part3

Hephasteus's picture

And the fire at the houston office of goldman says that "Nothing crazy will happen at end of year bonuses" is a lie. They'll probably start booting in a month or two.

Johnny Yuma's picture

BofA is a black hole that is slowly consuming itself. Count on cuts in other lines of business within the bank as well. US Trust has been a pimple on BofA's ass for a while. They're the red headed step child now that they have Merrill's PBIG. This should be interesting to watch.

I'm sure other banks will follow suit now that one of the big boys are cutting positions.

Terra-Firma's picture

WIth an election cycle in November and the middle to upper-middle class most worried it makes sense thaty markets would rise. Your President's staff are manipulating markets to get votes plain and simple. The higher the market the more middle class votes.

As I said. I remain short becuase I see a larger picture unfolding and the noise before us is only a skirmish.  Watch gold start tracking the DOW or S&P point for point soon. Now that is a convergence I would love to see.

 

Footnote: I am market neutral overall. I' ve shorted the DOW and the  S&P, holding physical gold I bought in the mid $800's and wonderful ocean front land on an island that is bought and paid for. Total overall position remains neutral leaning to the short side.

 

Land, gold, cash and short the market. Let's see what happens.

Buck Johnson's picture

They hire early this year and then fire/layoff before end of year bonus and during the holidays essentially.  And you are correct about the insiders keeping the market up so they can get out and lying to the people with their retirements in the market.  Once it's time to pull the plug, the others will be gone and we will be left holding the bag.

Arm's picture

Poor buggers.  Really, these are relatively humble backoffice guys who work 12hrs a day for only a slightly higher than average salary.  They neither caused the crisis nor did they rake in millions.  I truly feel for them and their families. 

God will this Chinese water torture depression ever end!

ZeroPower's picture

Traders aren't back office...

Ill assume youre talking about the personnel, though even thats not entirely clear.

Marley's picture

"No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend's or of thine own were: any man's death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bell tolls; it tolls for thee." -John Donnes

williambanzai7's picture

I have no sympathy for any of them, front office, back office, who cares. There are to many people engaged in financial services. The sooner we cut it back the better.

samsara's picture

 

Try this;

In the movie "The Sting"  If you remember the part right at the end, just after the sting, You watched them breaking down the bookie joint?    

That's temporally is about where we are I think.  

Notice another ZH story, 

"Insider Selling Outpaces Buying By Over 290-To-1 In Past Week" 

Well,  They're Cashing out(290-1), Stashing in the Caymens etc.  Paying off / Laying off the little people that manned the sting.   Got the tickets for the Island, and turning to JQPub saying,  "hold this please,  I have to dash out for awhile, I'll call ya..."  

Like "The Sing",  Closing down the horse racing parlor.  Where JUST like the movie, during the sting,  The "Inside"  got the "Wire" news moments ahead of the public. 

 

How uncanny huh?

 

 

Reishi-self's picture

Compassion - yes

 

Sympathy - no

 

maybe it helps some wake up

Herry12's picture

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