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Bank Of America To Fire 16,000 By Year End

Tyler Durden's picture




 

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 a massive 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 is not 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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Thu, 09/20/2012 - 07:50 | 2814276 GetZeeGold
GetZeeGold's picture

 

 

 

You're fired!!!

 

Hopefully Obama is hiring....total transformation takes lots of boots on the ground.

 

If you play your cards right.....you might get to work in Uganda.

 

 

Thu, 09/20/2012 - 07:54 | 2814289 duo
duo's picture

47...47...47...48...48...can we hit 51% by November?

Thu, 09/20/2012 - 08:07 | 2814312 mayhem_korner
mayhem_korner's picture

 

 

That's the goal, right - 51% of the voting public gubbmint-dependent makes re-election a lock (and might lighten the load for the mickey mouse and obituary votes...)

Thu, 09/20/2012 - 08:23 | 2814354 knukles
knukles's picture

 

 

 

The Illuminated Glory of Successful Gubamint Bailouts

BoA, GM, GS, JPM....

What else could go wrong?

Thu, 09/20/2012 - 09:23 | 2814595 Badabing
Badabing's picture

 .     I just wanted to say that 16,000 employees laid off is insignificant compared to the VIPs walking because they didn’t get a $2.500,000 bonus. Its probably just janitors anyway.   

Thu, 09/20/2012 - 09:49 | 2814716 pasco35
pasco35's picture

I'd like to see 160,000 get fired. That would be awesome!!!

Thu, 09/20/2012 - 10:43 | 2814947 Overfed
Overfed's picture

I'd like to see 160,000 fired from DHS.

Thu, 09/20/2012 - 08:24 | 2814359 rodocostarica
rodocostarica's picture

And could it be possible that Obama has the database of EBT folks along with telephone number in order to do get out the vote calls? No that could not be possible could it?

Thu, 09/20/2012 - 08:22 | 2814352 Snidley Whipsnae
Snidley Whipsnae's picture

Or a job delivering MREs to FEMA camps...

Thu, 09/20/2012 - 09:57 | 2814754 James
James's picture

Found this article on Forbes site.

Writers take on the numbers was interesting.

http://www.forbes.com/sites/louiswoodhill/2012/09/19/will-ben-bernankes-...

Thu, 09/20/2012 - 08:26 | 2814365 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Not to worry, I'm sure they can all find jobs at their respective local hollow point bullet manufactering facilities.

Thu, 09/20/2012 - 08:59 | 2814475 Son of Loki
Son of Loki's picture

I hope they don't compete for my job at Walamrt bagging groceries.

Thu, 09/20/2012 - 09:17 | 2814566 Chuck Walla
Chuck Walla's picture

Somehow, I am unable to work up any tears for BofA.

 

FORWARD SOVIET!

Thu, 09/20/2012 - 10:29 | 2814895 roadhazard
roadhazard's picture

Looks like OWS will be getting some new dirty hippies.

Thu, 09/20/2012 - 07:50 | 2814277 LongSoupLine
LongSoupLine's picture

 

 

16,000 down, and 259,000 to go...it's a good start.

Fuck them.

Thu, 09/20/2012 - 07:55 | 2814293 duo
duo's picture

there's only one company I hate more than BAC, and that's Monsanto. 

Thu, 09/20/2012 - 08:07 | 2814313 GetZeeGold
GetZeeGold's picture

 

 

 

Alas Solyndra.......the good guys never win.

 

Thu, 09/20/2012 - 08:11 | 2814323 duo
duo's picture

I'm waiting for BAC (who services my mortgage) to "forget" to pay my property taxes through escrow, then show up in January with papers saying they bought my house from the county for not paying my taxes, and then throw my stuff into the street.

Thu, 09/20/2012 - 08:19 | 2814338 malikai
malikai's picture

Your statement regarding monsanto is so offensive!!!

How could you hate the good american company which brought us such spectacular gifts as Terminator, Roundup, and Agent Orange?

Thankfully, Michael Taylor is now head of the FDA, where he can really do some good for the world.

Thu, 09/20/2012 - 09:21 | 2814588 holdbuysell
holdbuysell's picture

You might find this recent documentary interesting, as Monsanto finds itself front and center:

"Why in the World are They Spraying?"

http://www.youtube.com/watch?v=mEfJO0-cTis&feature=player_embedded

Thu, 09/20/2012 - 11:59 | 2815169 jayman21
jayman21's picture

LOL - Yep, good watch.  

Thu, 09/20/2012 - 11:56 | 2815160 jayman21
jayman21's picture

Who the fuck would junk you DUO over Monsanto?  Trolls are out and about today.

 

We have nice weather in NYC today.  Brought to you by Monsanto.  Let's see how many trolls I can get to junk my ass.

Thu, 09/20/2012 - 07:56 | 2814294 JPM Hater001
JPM Hater001's picture

If they keep the tellers and start with the leadership and lawyers they have a chance.

Thu, 09/20/2012 - 08:04 | 2814304 ArkansasAngie
ArkansasAngie's picture

And moral hazard be thy name.

That is the fallacy ... that we can't run the financial system without them ... upper management.  It isn't the peon who needs to be fired.

Out of 300,000,000 people in the US ... there's a big applicant pool for best and brightest.

Thu, 09/20/2012 - 08:42 | 2814413 Debtonation
Debtonation's picture

They could probably get a job at John Corzine's Hedge Fund.

Thu, 09/20/2012 - 08:37 | 2814397 Mae Kadoodie
Mae Kadoodie's picture

Bankers away my boys, bankers away...

Thu, 09/20/2012 - 09:24 | 2814601 CheapBastard
CheapBastard's picture

How will this influence Charlotte, NC unemployment:

http://www.hoovers.com/company/Bank_of_America_Corporation/hxccci-1.html

Thu, 09/20/2012 - 07:50 | 2814279 Debtonation
Debtonation's picture

They must be insolvent.

Thu, 09/20/2012 - 07:51 | 2814282 GetZeeGold
GetZeeGold's picture

 

 

That's a word we don't use.....ever.

 

Thu, 09/20/2012 - 08:13 | 2814331 LongSoupLine
LongSoupLine's picture

right!...we prefer "book balancing challenged" here.

Thu, 09/20/2012 - 08:54 | 2814457 Possible Impact
Possible Impact's picture

The solution: Fed will add more liquidity so as not to precipitate a disaster.

Although, if you are insolvent, dissolution is a normal reaction...

 

 

Thu, 09/20/2012 - 07:52 | 2814284 UGrev
UGrev's picture

FUCK YOU LYING BLOGGERS!!! THE ECONOMY IS GETTING BETTER!! OBAMA SAYS SO!!

/end heavy sarcasm.. 

Thu, 09/20/2012 - 08:50 | 2814439 XitSam
XitSam's picture

The media says so on Obama's behaf!  Select quotes from AP Sept 20th ...

 WASHINGTON (AP) -- The U.S. economy is showing signs of finally bottoming out: Americans are on the move again after record numbers had stayed put, more young adults are leaving their parents' homes to take a chance with college or the job market, once-sharp declines in births are leveling off and poverty is slowing.

 "We may be seeing the beginning of the American family's recovery from the Great Recession," said Andrew Cherlin, a professor of sociology and public policy at Johns Hopkins University. He pointed in particular to the upswing in mobility and to young men moving out of their parents' homes, both signs that more young adults were testing out job prospects.

"It could be the modest number of new jobs or simply the belief that the worst is over," Cherlin said.

Richard Freeman, an economist at Harvard University, said ...

While poverty slowed, food stamp use continued to climb.

Government programs did much to stave off higher rates of poverty.

"There are signs among all these measures that the multiple downsides of the Great Recession have bottomed out, which is good news especially for young people who have seen their lives put on hold," said William H. Frey, a demographer at Brookings Institution. "There is some light at the end of the tunnel."

Thu, 09/20/2012 - 07:53 | 2814285 duo
duo's picture

The FIRE economy has to return to 10% of GDP or the US will not survive.  There's a long way to go.

Thu, 09/20/2012 - 08:42 | 2814411 kito
kito's picture

The FIRE economy is burning to the ground.......not coming back despite ray dalios "beautiful" deleveraging.........

Thu, 09/20/2012 - 07:53 | 2814286 Dr Benway
Dr Benway's picture

Couldn't have happened to a nicer bunch of guys

Thu, 09/20/2012 - 08:21 | 2814348 Fidel Sarcastro
Fidel Sarcastro's picture

What about the crew at JPM...or Shitibank?

Thu, 09/20/2012 - 08:48 | 2814435 JPM Hater001
JPM Hater001's picture

"I should send flowers" to JPM.  That sounds about right.

Thu, 09/20/2012 - 07:53 | 2814288 Quinvarius
Quinvarius's picture

Seems like the bankers always do this enmasse just before an election.

Thu, 09/20/2012 - 07:54 | 2814290 not fat not stupid
not fat not stupid's picture

16,000 more for the lazy nose-picking 47%. Maybe 48% now.

Thu, 09/20/2012 - 08:48 | 2814434 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

Nice. That really is the point, too. Hyperinflationary shutdown of the physical economy over recent decades now moves into the financial economy, while the denser of the 1% (these, of course, being presidential material) just don't get it yet.

Thu, 09/20/2012 - 12:42 | 2815310 cbxer55
cbxer55's picture

Bankrupt American Airlines has handed out over 11,000 60 day notices. 

So add those in, you are at 49%.

Thu, 09/20/2012 - 07:55 | 2814292 Catullus
Catullus's picture

Good riddance. BofA is one of the worst. The ML people hate them. That $5 fee garbage last year was just shitballs insane. The ML folks wanted to strangle the BofA side. You don't charge a $5 fee with people who have millions with you. Period.

And mortgage rates may be low, but they won't give anyone those rates. And they certainly won't refi you at those rates. It's easier to just buy a new house (preferably with lower property taxes) than refi your house.

Thu, 09/20/2012 - 07:57 | 2814296 uff the fluff
uff the fluff's picture

Um, no. There is no reason whatsoever to posit that high employment in the financial sector is synonymous with economic strength.

Thu, 09/20/2012 - 09:43 | 2814692 Urban Redneck
Urban Redneck's picture

It has nothing to do with economic strength and everything to do with tax receipts, which provide the ability to maintain the facade of economic strength when coupled with the collective stupidity of the American people.

Thu, 09/20/2012 - 12:14 | 2815211 odatruf
odatruf's picture

Why even worry about tax receipts?  The Fed now just adds zeros to their digital balance sheet and then loans the government money.

Why would we even bother to collect a dime from - say, half* - the people when the Fed can just conjure it up?

* this is intended to be a factual statement.

Thu, 09/20/2012 - 07:58 | 2814299 buzzsaw99
buzzsaw99's picture

FUCK 'EM!!

Thu, 09/20/2012 - 08:00 | 2814301 Cdad
Cdad's picture

Well, that is good news.  So...what is that...four years of being hangers on?  And for what?

It is a good start, but more banker pink slips, please.

Thu, 09/20/2012 - 08:01 | 2814302 BadKiTTy
BadKiTTy's picture

Ho hum! 

Maybe a few less laughing at the OWS protesters on the sidewalk below.........

K@

Thu, 09/20/2012 - 08:03 | 2814306 AnAnonymous
AnAnonymous's picture

Not getting stronger? Ummmm... Dead weight, dead wood.

Removing dead wood might be an 'american' way to grow stronger.

'American' candidate to US presidency, Romney, has one slogan going like "for a stronger middle class"

By pushing under the train one part of the US american middle class and redistributing the released consumption to the other part of the US american middle class, maybe this part will indeed grow stronger.

Does one grow stronger through concentration of wealth?
Ask an 'american'. They have their own point of view on that.

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