This morning's report that U.S. jobless claims rebounded suggests that the economy may be slowing down. But Merrill Lynch & Co.'s (NYSE: MER) decision to clean house in its fixed income division tells us one source of future job losses.
Initial jobless claims rose by 16,000 to 317,000 in the week ending September 29, marking their highest level since September 8. Many of those job losses were undoubtedly related to the housing slowdown. Certainly an estimated $4 billion loss in housing finance -- in the form of too many subprime mortgages -- led to Merrill's canning of its global head of fixed income, Osman Semerci, his deputy, Dale Lattanzio, co-head of fixed income for the Americas and their former boss, Dow Kim, the former co-head of institutional securities.
Does Merrill's decision -- coupled with some 3,400 jobs cut already -- mark the beginning of a multi-year Wall Street slump? As DealBreaker posts, BreakingViews [subscription required] pointed out that more Wall Street heads could roll. 20% of New York City's financial workforce got the boot in the two years after the 2001 downturn. A 20% decline over the next few years would litter Wall Street with the blood of "40,000 Big Apple financiers."
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Merrill Lynch securities.
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Reader Comments (Page 1 of 1)
10-04-2007 @ 5:29PM
Seth said...
In light of the huge losses, some restructuring was needed at Merrill Lynch. However, I think they will bounce back from this loss pretty quickly. A Knowledge Map from NewsVisual of the corporate ties of their Board of Directors shows that they are extremely competent and experienced http://www.newsvisual.com/newsvisual/2007/10/experience-on-m.html . As a result they should have things running smoothely in no time.