Banks fired too many people
Aug 11th 2009 8:00AM
Updated Dec 3rd 2009 12:58PM
The credit crisis came within inches of shuttering several of the nation's largest banks and caused the fire sales of others. Firms could not fire people fast enough to bring down costs. Very few operations were spared. Traders who had been part of buying and selling toxic assets were nearly all cut loose. M&A and investment banking divisions lost most of their business as clients stopped raising money and buying other companies. The value of pools of capital run by asset management arms plunged.
What a difference a few months make. The rising stock market has made corporations anxious to raise money through stock and bond sales. The value of assets under management at many money management units is up. Proprietary trading floors at places like Goldman Sachs (GS) are making huge profits again.It turns out, Wall Street fired too many people. The actions were understandable at the time, but the rebound in a number of markets has caught most firms by surprise. According to Reuters, David McCormack, managing director at search firm Sheffield Haworth in New York said, "The world has changed dramatically in the last four to five months and now banks are hiring."
The wave of hiring will only make sense if markets continue to be robust. Global stock guru Mark Mobius recently said that markets could correct by 30 percent before the end of the year. Financial newspapers are full of stories about how the stock market has run too far too fast.
The banking activity pendulum has swung from feast to famine and now back to feast. If the economic recovery does not keep going straight up, the swinging is not over.
Douglas A. McIntyre is an editor at 24/7 Wall St.