Banking & Capital Markets

Pink Slips Paper Wall Street

Three different banks announce a round of layoffs, as the crisis spawned by the subprime-mortgage meltdown continues to take its toll.
Stephen TaubJanuary 25, 2008

The crisis in the financial-services industry, which has spawned multi-billion-dollar write-offs at a large number of firms, is also having an impact on the rank-and-file: at least three major Wall Street firms reportedly laid off workers on Thursday or are planning to do so very soon.

Morgan Stanley plans to eliminate more than 1,000 jobs in the next week or so, according to Reuters. The cuts will mostly affect wealth management and investment management, back-office operations, and the technology staff, according to the wire service.

Likewise, Lehman is dumping 140 traders involved in home loans and securities based on them, according to Bloomberg. The job cuts reportedly account for about 4 percent of the total number of employees in the brokerage’s fixed-income division, according to the report. The eliminated positions are concentrated in structured finance, commercial real estate, securitization, trading of mortgages, and collateralized debt obligations. Lehman already cut 3,750 jobs at subsidiaries that make home loans and shut down one of them last year, according to the wire service.

Bank of America also laid off workers, Bloomberg reported, firing about one quarter of its 72 securities analysts. Among those who lost their jobs: Robert Morris, the top-ranked oil-and-gas analyst for six straight years in Institutional Investor’s All-America Team, and John McDonald, the second-ranked large-cap bank analyst in 2007, according to the report. Bloomberg noted that last week BofA said it planned to eliminate 650 jobs in its investment-banking unit.

Altogether, Wall Street firms have fired more than 20,000 employees in the past six months, according to Bloomberg.