Wall Street plans to get smaller this summer. Faced with weak markets and uncertainty over regulations, many of the biggest firms are preparing for deep cuts in jobs and other costs.
The cutback plans are emerging even as Wall Street firms have mostly recovered from the financial crisis and are reporting substantial profits again. But those profits are not as big as they were before the crisis, and it is expected that in the coming months it will be even more difficult for firms to make money. Worries about debt in Europe and the shape that the Dodd-Frank financial overhaul rules will ultimately take, combined with the usual summer doldrums, are prompting banks to act.
Even Goldman Sachs, Wall Street’s most profitable firm, is retrenching. Senior executives at Goldman have concluded they need to cut 10 percent, or $1 billion, of noncompensation expenses over the next 12 months, according to a person close to the matter who was not authorized to speak on the record. The big pullback will cause Goldman employees, who have already been ordered to cut costs, to re-examine every aspect of their business.
The firm, this person said, had not set final targets for layoffs, but Goldman was “certain” to shrink headcount in the coming months. Decisions on bonuses are still months away, but they are sure to come down as well if business does not pick up.
Bank of America, Credit Suisse, Morgan Stanley, and Barclays Bank are also mentioned.
Now it's difficult to muster up a whole lot of sympathy for stockbrokers losing their jobs, but I'm quite certain that there will be a fair number of secretaries, tech support reps, network administrators, programmers, and other support staff booted as well, so that Lloyd Blankfein and Jamie Dimon can stuff their pockets even more.
And still the sound we hear in the American street about what the banks have done to our economy is not outrage, but crickets.