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While 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:
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Countrywide Financial (NYSE: CFC) cut 12,000
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IndyMac Bancorp (NYSE: IMB) will fire 1,000
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Accredited Home Lenders will cut 1,600 jobs
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Capital One Financial (NYSE: COF) will can 1,900 jobs when it closes its Greenpoint mortgage unit
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Morgan Stanley (NYSE: MS) is slicing 300 jobs
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The Bear Stearns Companies (NYSE: BSC): 310 layoffs
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HSBC Holdings (NYSE: HBC) is eliminating 750 positions
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Credit Suisse Group (NYSE: CS) is cutting 170
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Merrill Lynch (NYSE: MER) is slashing an undisclosed number of subprime jobs.
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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Reader Comments (Page 1 of 1)
10-24-2007 @ 9:34AM
Long Term said...
MS cut more than 300 jobs unless you are projecting additional layoffs, they closed the entire Virginia office of Saxon Mortgage, Inc. on 10/2, cut Saxon jobs in California and Florida to include Sales, Ops, HR, IT, Risk, etc. Some employees are still in VA until Nov. and Feb then they will be gone as well. They have and had staff in Virginia training people in other states for the jobs they were doing or are currently doing until they are displaced and their new people in TX/Cali take over. There's irony in here somewhere.