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Wall Street's 2007 bumper crop? Layoffs

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Empty officeWhile 2006 may go down in Wall Street history as a year of record profits, 2007 is looking to be a record year for layoffs. BusinessWeek reports that with two months to go, Wall Street has announced 130,000 job cuts so far in 2007 -- more than double the 50,000 cuts announced in 2006 and higher than the record 116,000 announced in 2001.

Why? The cratering of the mortgage business -- involving mortgage workers and the packagers and traders of mortgage-backed securities. Here are some examples:

What's next? 2008 will see even more layoffs. That's because Wall Street staffed up hugely to cater to the private equity firms and hedge funds. But thanks to the drying up of credit for private equity deals, that business has already slammed the brakes on deals. With nothing to do, these private equity people will join their subprime fixed income pros. And even hedge funds -- many of which had problems in August -- could be slashing staff.

One of the reasons they make the big bucks on Wall Street is that their careers can be brutish and short. This year and next will provide plenty of evidence of that.

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 the securities mentioned.

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Last updated: July 06, 2009: 03:19 PM

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