Bank of America May Cut 40,000 Jobs

Bank of AmericaBank of America (BAC) may cut 40,000 workers in an attempt to show investors that its management has the discipline to run the firm that many believe is in too many businesses. It is another example of how deep cuts in the private sector, combined with public sector downsizing, could undermine national job growth efforts. The Wall Street Journal reports that "The numbers aren't final and could change. The restructuring would reduce the bank's work force over a period of years." CEO Brian Moynihan has promised to cut quarterly expenses by $1.5 billion.

Wall Street has expressed deep concern about the bank's future. Four weeks ago, shares dropped to $6.01 and appeared ready to go lower until Warren Buffett provided $5 billion on terms that some experts said did not favor the bank but would give the billionaire a large return. The bank's 52-week high is $15.31. BofA also sold half of its stake in China Construction Bank for $8.3 billion. This was after the bank said it did not need new capital.

Bank of America will make the cuts, and may sell some units, to focus more closely on its Merrill Lynch division and corporate and institutional banking. It recently appointed co-chief operating officers to reflect implementations of these plans.

The report about the size of the layoffs comes just hours after President Obama announced a $447 billion jobs package. It is meant to stimulate hiring through payroll cuts, the extension of current tax credits, and an infrastructure bank. Those efforts could easily be undermined as concerns about the near-term future of the economy drive firms large and small to begin the layoffs that were hallmarks of the last recession. This trend will be coupled with layoffs by local, state, and probably federal governments which have already begun as austerity programs increase to offset low tax receipts which are a result of the 2007-2009 economic contraction.

Forty thousand jobs are more than the entire U.S. economy has created, on average, over each of the last three months. Granted, the cuts will not occur all in one year. But as American firms confront the prospects of poor performance, it may be hard for any government plan to offset the results of nervous executives.

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reaganshop

abcadams1 - the stimulus given under Bush is what kept the economy from imploding. The same stimulus that the Obama administration has reported not only cost less than anyone could have imagined, but brought in 16 billion in interest from the banks! Does anyone wonder where that money went, cause it sure as heck didn't go toward bringing down the debt.

As the govt puts more and more restrictions on what the banks can charge and forces them to pay for ridiculous lawsuits - it means they make less. Less income leads to employee layoffs!

September 09 2011 at 5:52 PM Report abuse rate up rate down Reply
reaganshop

Perhaps if the govt had not FORCED BofA to acquire Merrill Lynch the bank would not be in this situation. As many may have forgotten,prior to the deal (initiated by the govt in the frenzy to prop up Wall Street) the now EX-CEO discovered that Merrill Lynch was not in the financial shape he had been told. He wanted a responsible amount of time to look over the books. The govt THREATENED his job if he did not go along with the plan. Then they heaped all of ML's financial issues onto BOA.

The govt FORCED banks to make loans to people that previously wld not have qualified. Now they want to go after the banks for giving out these loans????? FORCED is the right word - the Democratic Congress passed laws to this effect.

Convenient to leave out Freddie and Fannie - whose execs manipulated billions of dollars to get their bonuses. The earnings they illegally reported impacted investors and Wall Street. Why is Franklin Raines, indicted CEO of Fannie who falsely testified before Congress, being investigated and charged? Could it be because he was an Obama advisor during the campaign (as reported in the NY Times).

The laws don't get to apply only to those the govt doesn't like!

September 09 2011 at 5:45 PM Report abuse rate up rate down Reply
lkfishn

Bank of America is just trying to get even for the Obama administation suing them and 10 other large banks because of their participation and facilitating the real estate bubble. These bank executives should be in JAIL and their property confiscated. Maybe then they would learn what it's like for some of their victims.

September 09 2011 at 1:55 PM Report abuse rate up rate down Reply
barryaclarke

Why not make it 40,001 and include the CEO?

September 09 2011 at 1:46 PM Report abuse rate up rate down Reply
apparelp

F BofA let em fail they were so stupid to set up bad mortgages let em eat it all I say. Not sure what Buffet saw in this falling knife.

September 09 2011 at 1:19 PM Report abuse +1 rate up rate down Reply
marine1942

Bank of America is NOT too big to fail

September 09 2011 at 12:59 PM Report abuse rate up rate down Reply
abcadams1

China can bail out BOA next time.
Stock market during Bush: 1/20/01 = 10,800; 1/20/09 = 8,200; = Market down 24% during Bush's Eight Years. Stock market under Obama: 1/20/09 = 8,200; 9/9/09 = 11,400. Market up 39% in Obama's 2 1/2 years. It's probably because the Republicans do not want to pass initiatives Obama wants. Obama wants a $1,200 tax credit for the middle class, a $4,000 tax credit for companies that hire someone who was unemployed for six months or longer, and Obama wants to offer a tax credit for companies that hire our soldiers coming home from war. Democrats are for tax credits and Republicans are against tax credits.

September 09 2011 at 12:42 PM Report abuse -1 rate up rate down Reply
chris1011

Republican­s think that the way to prosperity is to lower taxes for corporatio­ns and the wealthy while cutting regulation­.

In the second quarter of 2011, after-tax corporate profits made up the largest share of GDP since the government began tracking in 1947. So apparently profit is not a problem for these corporatio­ns under current regulation­s. Two thirds of them pay no taxes. I am not sure how we would lower those taxes further.

When the first Bush tax cuts were enacted in June 2001, pushing the top rate down to 35 percent, the wealthy boosted savings. The saving rate climbed 2.8 percent. After the second round of Bush tax cuts in May 2003, the rich proportion­ately increased their saving, with the rate climbing 7.6 percent. When taxes were raised under Bill Clinton, the saving rate fell as the savings were invested.

The "rich" are NOT investing the tax cuts into the economy or creating jobs.

Taxes are at the lowest in 50 years. Corporate profits are at their highest since 1960. Companies are sitting on the largest stockpile of cash in US history. The top 1% saw their wealth increase 5-fold during the recession and now own more financial wealth than the entire bottom 40% of taxpayers. But wages make up the lowest share of national income since they began tracking it in 1947 and have since 2006.

September 09 2011 at 12:28 PM Report abuse rate up rate down Reply
hustonlaw

Well that's why the Obama Administration and Congress insisted on bailing out the banks: so that they would dee-six the economy by laying off huge numbers of workers. How un-Ameerican can our private companies get? They stick the profits into their pockets, and fire their workers. Oh, and they don't make loans to small or medium sized businesses, either. And yet - just like his belief that Republicans aren't terrorists, and can be dealt with in a non-partisan fashion, the President persists in his belief that private enterprise can be counted on to do the right thing, a la cut corporate taxes paid for workers and corporations will hire more people. Any way you wrap it , and however you try to dignify it with fine sounding speeches, that kind of persistence is just plain ignorant.

September 09 2011 at 11:56 AM Report abuse rate up rate down Reply
Ray Scarth

30K of those 40K jobs should be at the executive level, lord know's they have too much fat at management level!

September 09 2011 at 11:56 AM Report abuse rate up rate down Reply