Liberal critics say Washington has been coddling Wall Street and ignoring the issue of joblessness, but now it looks like joblessness is becoming a Wall Street issue, too.
A weakening equities market environment reportedly has some of Wall Street’s biggest firms either embarking on a round of “stealth” layoffs of brokers and investment bankers, or making plans to cut staff before the year is out.
With the bull market that pushed the Dow Jones Industrial average to new highs following years of losses now fading, the Fed backing away from any new stimulus moves and new regulatory pressures from the Dodd-Frank Financial Reform Act threatening to squeeze margins, Wall Street banks are looking to cut costs.
One of those oldest and most effective ways to do so is by cutting staff.
Barclays Capital, Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley Smith Barney, according to the New York Post, are all reportedly among the major financial institutions paring payroll or considering future staff cuts.
Although personnel cuts at the big global institutions could involve their worldwide staff, New York City, which has close to 170,000 people employed in the securities industry, could be particularly hard hit.
Any cuts in bank headcount are likely to be handled as carefully and as discretely as possible. Besides the bad PR, most of the big banks just spent a lot of money on hiring bonuses and other incentives used to lure top producing broker/dealers (28,000 were added in the last two years as markets and the economy began to recover).
Many of these new hires are just nearing the end of any retention deals that might have been deterring them from jumping to another firm. The last thing these banks would want to do is trim some less productive staffers only to have their top producers then also leave for greener pastures.
So far, the major focus on layoffs in the bank sector is on Barclays, which is said to be considering “significant headcount reductions” by year’s end. Barclay’s recently laid off about 50 people from its global equities sales and trading unit earlier this year.
Back in January, Barclays laid off several hundred employees, less than six months after it had just added over 2,000 people.
The move followed State Street’s announcement last December that it was laying off 1,400 people -- roughly 5% of its workforce -- and closing some offices, in an effort to save the bank as much as $625 million a year by 2014.