Bank of America to Cut Thousands of Jobs

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Bank of America Corp.(BAC), the nation's largest bank, plans to cut 3,500 jobs by the end of September.

The cuts amount to a little more than 1 percent of the bank's workforce of roughly 288,000. But they follow a string of other layoffs, including 2,500 already announced this year.

A bank spokesman declined to say if the cuts would be concentrated in a particular part of the country, but said they would be spread across most of the business units.

"The company regularly assesses the efficiency of its businesses and at times is going to make adjustments to meet the opportunities that are in the marketplace," said spokesman Scott Silvestri. The bank has previously cut jobs in the mortgage lending and investment banking, for example, after demand for those services slowed.

Silvestri said the layoffs were not part of "New BAC," a cost-cutting program announced in May.

After this round of layoffs, the bank should have about 284,000 employees. Its roster peaked in early 2009, right after it absorbed Merrill Lynch and Countrywide, at about 302,000.

The entire banking industry is shrinking, as new regulations and the fallout of the financial crisis force it to become smaller, simpler and less profitable. Many of the complicated investment vehicles that fueled the industry before 2008 are gone, after being blamed for causing the financial crisis.

U.S. banks employ about 2.09 million people, down from 2.21 million people in early 2008, according to data compiled by the Federal Deposit Insurance Corp.

The finance and insurance industry made up about 8 percent of the country's gross domestic product last year, according to the federal Bureau of Economic Analysis. That's in line with where it was in 2007, before the financial crisis took hold.

Like other industries, banking has always ebbed and flowed with the markets. It started laying off investment bankers during the credit crunch of 2007. It laid off workers again in 2008 and 2009, as the financial crisis sent many banks into the red and forced them to take government bailouts. But 2010 provided some relief, with shares bouncing back and banks making profits, and banks even hired back some workers.

But now banks are cutting jobs again. Bank of New York Mellon Corp., Goldman Sachs Group Inc. and State Street Corp., among others, have recently announced layoffs.

This latest round is different because it's coming at a time when many banks are actually posting improved profits. Analysts say the latest cuts point to permanent structural changes, not temporary market problems.

The KBW Bank Index has fallen 22 percent this month as of Friday morning, compared to a 12 percent fall in the S&P 500. Bank of America shares have fallen 28 percent.

Investors are worried about banks' exposure to continued problems over soured mortgages and mortgage-backed securities. Though the banks' capital cushions are higher and many are turning profits, it's not known how much they could have to pay to investors who claim they were misled into buying the securities.

Bank of America is especially vulnerable, partly because of its fast expansion during the height of the financial crisis: It's still cleaning up the exotic mortgages of Countrywide Financial Corp., a California-based lender it bought in the summer of 2008. The move propelled the Charlotte bank into the country's biggest mortgage lender, but it has also brought it lawsuits, regulatory probes and quarterly losses.

Some analysts say the bank rushed into buying Countrywide and should have tried to get the government to protect it from Countrywide's worst assets, similar to a deal that JPMorgan Chase & Co. secured when it bought Washington Mutual. Some analysts have wondered whether Bank of America should file for bankruptcy protection for Countrywide, though it's unclear if that's even possible.

Less than three months after the Countrywide purchase, Bank of America also agreed to buy struggling investment bank Merrill Lynch. That was a year after then-CEO Ken Lewis famously declared that he'd already had all the fun he could stand in investment banking after that unit's profits plummeted. Lewis later stepped down over controversy around the Merrill deal.

Brian Moynihan, Bank of America's CEO for a year and a half, is slimming down the bank after his predecessors' years of empire building. He's been cutting expenses, closing branches and selling off assets to build capital. The bank's announcement Monday that it would sell international credit-card units sent the shares soaring 8 percent. The bank points out that its capital levels are high and its default rates are lower.

The bank has lost money in three of the six quarters since Moynihan became CEO, including an $8.8 billion loss in the second quarter as it said aside money for potential claims from mortgage securities investors. Moynihan has been telling shareholders and employees that the bank is in the middle of a transformation that might be painful now but will stabilize it long-term.

"We cannot control the seas around us," Moynihan wrote in a letter to employees last week, "but with the best franchise in the industry, and the best team in place to deliver its benefits to our customers, I am confident we will achieve our goals working together."

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Brenda

My latest blog post about Age Discrimination may be helpful to some of the BofA employees. My blog is Work, Careers & Jobs@40+. Visit, comment or follow:

http://workinglater.blogpost.com

August 22 2011 at 3:36 AM Report abuse rate up rate down Reply
GOODDOC1

The link said "Bank to cut 10,000 jobs". Am I missing the math?

August 21 2011 at 12:11 AM Report abuse rate up rate down Reply
Matty & Ko Iida

Bank CD's, particularly credit union CD's paid easily 4-6 % APY interest a few years back. Pay no % now.
Stock market gyration. Asuuming with a little money to live for the rest of life, no place to put that money,
how can we live for the rest of our lives?

August 20 2011 at 10:45 PM Report abuse rate up rate down Reply
giftsthatpurr

Instead of laying off workers Bof A should be dumping CEOs

August 20 2011 at 10:34 PM Report abuse rate up rate down Reply
HiRoader

Can't see the tax payers bailing out another bank.., Bank of America has the option to merge and/or apply affordable interest product according to the economic environment.... Consumers need to smarten up about the pricing of the contracting responsibility that their conducting with these banks.... Back in 2008, I posed the question, " Was it subprime loans? or predatory lending?"... Never-the-less the banking industry has chosen to continue to issue the same method of " exotic interest & Contractual Profits" from it's borrowers.., And bailouts from the fleeting employed "tax payers" must be the banks plan "B".., Better yet our government can continue to print out more money.., Just rename the U.S dollar (pesos)... Now debit cards have an (*experimental*) fee..., Just say NO!...

August 20 2011 at 10:24 PM Report abuse rate up rate down Reply
alucky1128f8@aol

GOODNIGHT AND GOD BLESS ALL MY CONSERVATIVE FRIENDS !!!! HAVE A GREAT SUNDAY AND PRAISE THE LORD, OUR ONLY LEADER !!!!!!. THE ONLY ONE WHO REALLY COUNTS !!!!! JESUS CHRIST !!!!!!.

August 20 2011 at 10:15 PM Report abuse +1 rate up rate down Reply
Keith

So much for that OBama stimulus providing jobs..........

August 20 2011 at 10:13 PM Report abuse rate up rate down Reply
savemycountry911

Join a credit union. They don't pay enough interest but at least they don't rob you.

August 20 2011 at 10:04 PM Report abuse +1 rate up rate down Reply
darinw40@mail.com

They earned them...I feel for their employees...but they ought to see the writing on the wall that we the people will exercise our hatred towards them and they should seek employment elsewhere....with all their bs fees it's amazing they even have any customers left

August 20 2011 at 10:03 PM Report abuse rate up rate down Reply
westy666

Remember when Bank of America changed its name to BANK OF OPPORTUNITY and offered credit cards, mortgages, car loans to UNDOCUMENTED/ILLEGAL ALIENS?

Remember when Bank of America paid out all those BIG ASS BONUSES to their incompetent executives AND the Merrill Lynch folks that were liquidated because they were so incompetent?

Guess who is PAYING OFF THOSE GREEDY, BAD RISKS? The customers of Bank of America, the taxpayers of the United States (TARP), and now the salaries from laid off rank and file (NON-EXECUTIVE) employees of Bank of America. Anyone that STILL has money at Bank of America should have their head examined and sign up for a Battered Wife Syndrome class - you fit the description. Go back to LOCAL BANKS or CREDIT UNIONS...send the 2BIG2FAIL&GOT$%&*LOADSBIGGER favorites of Wall Street to TAKE A HIKE.

August 20 2011 at 9:58 PM Report abuse +1 rate up rate down Reply