Bank of America and 40K layoffs

Should had their headquarters in Manhattan. They never would have gotten themselves into this situation if they were located here. The talent is just not there in Charlotte.

"had" = "have"

If you ever find yourself in midtown near 42nd and 6th, look up at the building on the NW corner. It's called the "Bank of America Tower". It is the 2nd tallest building in NYC, the 4th tallest in the US, completed in 2009.

ya it's nice. What does that have to do with the fact that the Bank of America Corporate Center is located in the center of Uptown Charlotte.

ohh and its a nice big building too. Largest skyscraper between Philly and Atlanta.

Never would have gotten themselves into this situation if they were located here? Smart guy, did you hear what happened to Lehman, Bear, Citi, AIG, etc? The real point of this story is that 40K jobs will be gone which will hurt, not help, NYC real estate. And BofA isn't the only bank doing this.

"Should had their headquarters in Manhattan. They never would have gotten themselves into this situation if they were located here. The talent is just not there in Charlotte."

You mean like the talent at Merrill that B of A saved from oblivion like their talented competitors at Bear and unlike their other talented competitors at Lehman?

They have more employees in Manhattan than Charlotte. And BAML is here not there.

Speaking of which

http://dealbook.nytimes.com/2011/09/08/merrill-lynch-cuts-several-hundred-jobs/

If one were trying to get the politicians to kill the lawsuits, would you not pad the lay-off numbers?
Not that Bank America has some serious solvency issues, but I would not be surprised if they are using this announcement as p.r. to scare the polticians, judges, and regulators.

Flmaozzzzz. Conspiracy theories from rebubblesider.

How is your coop force field working out for ya?

The CEO is based in Boston - from the Fleet days. Really, they need that enema.

another no-brainer from skeeveF:

these layoffs will immediately effect higher rental and sale prices for shithole studios in C- manhattan neighborhoods

"The talent is just not there in Charlotte."

The talent is wherever the money is.

"The talent is wherever the money is."

So, enormous amounts of talent in the Cayman Islands then?

Steve F come on now. I don't mind you being a RE bull but you really sound stupid in your first posts. Give me a break. How ridiculous. Don't you know the world doesn't want to be in Manhattan any longer and if you are offered a terrific job in finance you go where ever they offer you the job. Pick up and move. NYC ain't what it used to be.

NY was never what you thought it was.

"NYC ain't what it used to be."

And neither is the old gray mare.

@steveF is right - they would have been in much less trouble if they were in manhattan. not b/c of the talent but because of the automatic stroke jobs the ny fed gives to all the favorites...talent is not necessary when u can legally steal all the money u want.

What are you talking about inonada? According to 300_mercer, unemployment does not matter in Manhattan and Bank Of America is over-capitalized.

http://streeteasy.com/nyc/talk/discussion/28042-national-2003-what-is-ny

You're right, Sunday.

Seriously, BoA is in the shitter because the rah-rahed with the bubble. But even when it became painfully obvious to all what a bubble it was, they didn't get it and played patsy by buying other people's shit: Countrywide and Merill. "Oh, the little drop came and went. It's all going to be great in no time. Fundamentals? Price-to-rent? Price-to-income? It's different this time, this is special."

Sound familiar?

BofA was fine till they bought Countrywide, and overpaid for Merrill Lynch and MBNA.

>BofA was fine till they bought Countrywide, and overpaid for Merrill Lynch and MBNA.

Yes

>Sound familiar?

No

>Bank of America Corp officials have discussed slashing roughly 40,000 jobs

Well timed for Obama's job plans

BofA needs to be nationalized right away.

What would our nation do with BofA?

nada/sunday,
I turned bullish on New York real estate in Greenwich Village when at the peak of the recession in 2009 28 east 10th street sold like hot cakes at $1500 per sq ft (well designed high-end space, windows are ok, ceiling height 9 feet, maintenace and tax normal with no abatement). I never thought people would pay more than 1300 a sq ft for high floor apartments (1000 per sq ft for basic + $300 per sq ft for nice reno). All the banks were in far more trouble that time than now and world was going to end.

Since we want to live in prime village which has limited rental loft/pre-war supply, I started to look for a place we liked and we finally found a wonderful 2800 sq ft loft at 1050 per sq ft including minor renovations to bring it to high-end rental/nice reno sale apartment (not talking USW 15 finishes).

On the rates, this is what my thinking is. In order to live in the place like the one we bought we would need to pay AT LEAST 10K in rent (Nada would claim that he can find it for $8-9k) and have the hassle of moving every 3 years. The place is costing us $8k including upkeep since we are not paying down the principal . We are largely cash investors with significant exposure to the market via our jobs and do not care about lost return on downpayment. Current rates are 3% for five years.

If the current economic conditions continue, I believe rates five years from now will not change from the current levels rather than behave as per the forwards. The rents will not go up either. This means we are still saving money on a cash-flow basis and living in nice place. Of course, one will say that the prices will go down. Read the first paragraph as the answer and we do not need to sell.

On the point about rising interest rates having a downward pressure on real estate, it is only true if the rate increase is not accompanied by economic growth. I believe the short term rates increasing by 2-3% is likely due to strong economy and plenty of Mercer IIs getting paid more will put a stong bid to real estate. Rents also would go up making buying still cheaper than renting (Mercer II buy vs rent will still work due to higher rents and desire not be held at ranson by the landlord).

The negative scenario for us, is stagflation accompanied by high rates. I think that is just economic fantasy. We also plan to pay down good 50% of our mortgage in the next 5 years minimizing the risk for very high rates.

Equities suck. Ask anyone who remain invested at 1350 level. I did not see bearish comments from Nada about equities at that level. That said I think equities are a good buy at current levels for a ride to 1250 on SPX.

300_mercer, so you are sticking with your opinion that unemployment does not matter in Manhattan and Bank Of America is over-capitalized?

The unemployment in Manhattan for people making >300K (people who would buy prime manhattan apartments) will not get worse than it got in 2009 (see my Devenshire comment).

BAC is already at 50% of book value. There is far more upside than downside at this level. Securities business at BAC is doing ok. Mortgage will cost them another 10-15 billion which they already have in reserve.

BAC is certainly not under-capitalized after their recent asset sales. If we have a severe double-dip > 6-7% contraction, they will have issues as they can not handle both legal issues and double-dip.

>>>Steve F come on now. I don't mind you being a RE bull but you really sound stupid in your first posts. Give me a break.

he has a lot of first posts

"The unemployment in Manhattan for people making >300K (people who would buy prime manhattan apartments) will not get worse than it got in 2009 (see my Devenshire comment)."

Boy you don't read much, do you.

"Capital Law May Cut Bank Profitability to 11%, McKinsey Says"

http://www.bloomberg.com/news/2011-08-30/capital-rules-may-cut-bank-profitability-to-11-mckinsey-says.html

Morgan Stanley, JP Morgan, and just about every other analyst says the same thing. ROEs will be permanently lower under Basil 3, Dodd-Frank, etc. The banks WILL NOT make as much as the used to make.

"If staff at investment banks thought they had put the worst of the cutbacks behind them, they should think again. Investment banks will need to take out between 6% and 8% of their costs in the next 12 to 18 months if they are to meet their reduced return-on-equity targets, with as many as 20,000 back and middle office jobs likely to go in the process, according to the report from Morgan Stanley and Oliver Wyman. "

http://www.efinancialnews.com/story/2011-04-01/morgan-stanley-wyman

10% of those making 30k will be replaced by algorythyms, and another 30% will make only $200k.

http://www.efinancialnews.com/story/2011-04-01/morgan-stanley-wyman

"I believe the short term rates increasing by 2-3% is likely due to strong economy."

Strong economy means short-term rates at target inflation? With friends like these, who needs enemies?

5-year rates are at 0.81% right now. Here is the history of 5-year rates since 1962.

http://www.federalreserve.gov/datadownload/Output.aspx?rel=H15&series=cdf4585bf4875637a090e054e55e414d&lastObs=&from=&to=&filetype=csv&label=include&layout=seriescolumn

All years except 2002, 2008, 2009, and 2010 had 5-year rates above 3%. Out of 50 years. Boy, I remember how strong the economy was during those years. Good times!

Strong economy, eh?

http://www.nytimes.com/2011/09/10/business/economy/wholesale-inventories-rose-in-july-as-sales-fell.html?ref=business

The only thing that's rising right now is inventories. Even CANADA lost jobs.

http://www.nytimes.com/2011/09/10/business/canada-posts-first-jobs-decline-in-5-months.html?ref=business

Though for all their Socialism, their unemployment rate is a lot lower than ours.

"Equities suck. Ask anyone who remain invested at 1350 level. I did not see bearish comments from Nada about equities at that level. That said I think equities are a good buy at current levels for a ride to 1250 on SPX."

A 15% drop from a high-water mark in equities has you wimpering? You sound like you don't have the stomach for investing, will panic, etc. As much as I would like to be omniprescient about the exact movements of the stock market at all times, I'm not. I am a long-term buyer of equities with my excess income, and all I do modulate whether or not I'm buying: to actively sell would incur tax consequences that are larger than my ability to predict short-term movements. All said, I'm happier at these levels: I like buying cheaper. If we went down to 1000 or 900, I'd be happier still.

BTW, here's what I said back in Feb when the market was at 1300+:

http://streeteasy.com/nyc/talk/discussion/24949-virgin-post-calling-all-finance-geniusestrolls
"bjw2103>> inonada, I'm sure you've posted this elsewhere, but are you 100% in equities right now? I have cash and put in quite a bit last year (all in ETFs), but am hesitating putting more at this point."

I'm not full-up at the moment, but that is more a function of excess income than anything else. I haven't yet decided what to do with the excess, but there's a chance I'll be looking for pockets of value. Truth be told, if things were still at 1100, I might be happier despite the gains over the past couple of years."

Of course, inododo is smarter than everyone else.

300_mercer, I can respect your opinion about whether BAC is a "buy" at current valuation or your decision to buy a home at current price levels. However, it's hard to take you seriously when you think the high unemployment rate, especially for an extended amount of time, has no impact on prime Manhattan RE. It's like NYCMatt saying the rich doesn't care about capital losses.

How did you come to the conclusion that BAC do not have capital issues after the recent assets sales and the $5b from Buffet? I do not know of one major bank that is not currently working on meeting Basel 3 capital requirements. While one can believe that BAC can achieve it without a dilutive stock offering, but that's not to say they don't have to raise additional capital through more asset sales. As for the reserve they set aside for mortgage related issues, do you really believe that number will not have to go up significantly? Again, that's not to say BAC is a sell at current valuation.

Sunday, the point I am trying to make is that 2009 unemployment in finance was much worse & financials stock were much lower. Every thought that all banks except GS and JPM will become Lehman. Conditions are far better now. With pending lay-offs, situation will still be better than 2009. Hence my becoming comfortable with NYC prime real estate prices (Devonshire being the turnign point). If you believe that conditions will become worst than 2009 (with SPX at 666-900 range in 2009), you will not find that many people ageeing with you except on this board.

I understand Basle III but also know that many banks are already compliant. In addition, certain trading strategies are very punitive in Basle III. Reduction of these strategies is always possble. These are not big money making strategies but take some time to unwind.

Q.E. easing is no hurting the performance of financial stocks. Companies that used to make a business lending securities can no longer do so as the Fed offers much better rates. Plus as rates go to zero, there's a growing sense that it's not worth taking risk for so little return so might as well keep in Treasuries or in the mattress. And then you have the regulators finally cracking down on bad accounting, excessive leverage and the new fear of litigation if you screw your customer.

mercer: if you want to compare 2011 to 2008/ 2009 (which i question), i think we are more likely to be pre- Bear or between Bear and Lehman. As far as i can tell the only solution in Europe would mean the germans paying for everyone else or letting the whole thing go and watching their banks collapse. the united states is paralyzed politically with no leadership in sight. the thought that wall street can continue on providing such high incomes seems difficult to believe.

"Sunday, the point I am trying to make is that 2009 unemployment in finance was much worse"

The data does not bear out your belief. The NY labor dept's & WSJ's favorite measure of "Wall Street employment", which is a fraction of the overall financial services employment, is NYC's "Securs., Commod. Contr., and Othr. Finan. Invs. and Relat. Activs." category. You can look up historical data at http://www.labor.ny.gov/stats/cesemp.asp.

You'll see that current employment is flattish to 2009 at around 165K, down 20K from the 2008 highs. If employment drops from current levels (as the layoffs would indicate), then employment will be worse than 2009. No doubt solvency fears have much abated since 2009, but confidence in the system does not pay the mortgage / rent. Employment & actual income does.

In 2009, people were not upgrading for fear of not having the income. If the projected layoffs happen, the hit will be to the actual income.

Mercer sounds like you are grasping at unicorn hairs. -shrug- if u so rich who carez about buying into a bubble. Your growing income will make up for the fact a hamburger flipper will be your neighbor w a smaller nut and better lifestyle, no?

I don't know about you but my wife and I didn't get an education to rub elbows with housesitter union workers. Fk I don't send my kids to private school and talk hard work and meritocracy to have them try to keep with up key Sherpas. But wtf do I know?

$500psf and my $$$$$ cash just gained 5% versus the euro. Nice pickup as we plan to buy a place in Paris in a few years.

you will have to live on avenue foch. nothing less will do.

Financial services will be a lower percentage of GDP across the developed world, by the design of global regulators. This is a fact. Basel 3, Dodd-Frank, its EU equivalent, etc. Every banks analyst - 100% of them - say this.

Question, is w67thstreet a U.S. citizen?

>>>>Financial services will be a lower percentage of GDP across the developed world, by the design of global regulators. This is a fact. Basel 3, Dodd-Frank, its EU equivalent, etc. Every banks analyst - 100% of them - say this.

what effect will this have on real estate in Manhattan, resi and CRE?

None

Oh Oh. Prepare for another bumpy ride in the markets this week. This is a public admission of concern that the German govt was playing down up till now -- preparing for a country leaving the euro. To my knowledge, only Jamie Diamond has really been forthcoming with actual number of JPM's exposure to Euro sovereign debt. Has BOA made figures public? Or is the 40,000 employee cut a sign of a prememptive move.

http://www.spiegel.de/international/europe/0,1518,785482,00.html

Brooks: the Manhattan RE market is highly correlated to the financial services industry. Wall Street has been very good for all aspects of the manhattan economy.

Oh good, more negativity from apt23. Apt23 must have LOVED today.

>>>>Brooks: the Manhattan RE market is highly correlated to the financial services industry. Wall Street has been very good for all aspects of the manhattan economy.

Agreed-- Thought I'd try to make that point by trying to get people to think for them selves instead of following the herd.

Brooks2, welcome to streeteasy, you've become a prolific poster pretty quickly. Welcome.

"...Outlook for global investment banking industry worsens
Global investment banks face an onslaught of regulation, declining share prices and other challenges, resulting in the industry's worst outlook since the financial crisis..." Financial Times (9/8)

http://www.ft.com/intl/cms/s/0/ee49b518-d96b-11e0-b52f-00144feabdc0.html#axzz1XkULNNbk

> Brooks: the Manhattan RE market is highly correlated to the financial services industry. Wall Street has been very good for all aspects of the manhattan economy.

but 25k of the initial 30k layoffs belong to commercial banking. imho those jobs are not concentrated in manhattan

brooksie, in another post you say you are "trying to keep a novice buyer safe from an unethical and incompetent broker" or some such bullshit (meanwhile the op states he is an investor).

here instead of being a nanny to protect innocent buyers you claim to be trying to get people to think for themselves.

you have alot of agendas, including broker bashing. what gives?

More regulations is good for job creation. It forces companies to hire more lawyers. I spoke to a compliance attorney not that long ago. He says he LOVES massive government regulations. They are the bread and butter of his career and how he has a job.

Just think about all of the jobs created by 9/11. Doctors and Nurses. TSA Agents. Police and Law Enforcement. Military. Construction.

By the way Socialist, what regulation does is it creates jobs, mainly overseas.

Sarbanes Oxley was a big boom to the accounting and auditing profession.

THe lawyers will find a way to get rich off of Dodd-Frank. I guarantee it.

The H1-B Visa system is also another example of a job creating and job destroying regulation. It destroys jobs for engineers and IT workers, but it is nothing but $$$$$$ for immigration lawyers.

>Sarbanes Oxley was a big boom to the accounting and auditing profession.

Except for those companies that chose not to list in the U.S.

Except for the smaller companies whose burden under the law would have been too large, and consequently chose not to list.

So you like lawyers or no?

Remember, someone has to sue for you.

Actually, the number of IPOs has been increasing this year. So compnaies are listing.

IMMIGRATION lawyers are a total drain on society. We don't need them.

You hate foreigners, right?

I love foreigners. They do the landscaping and take care of the pool at my new house:

http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1127081&dayssince=&countysearch=false

Too much dusting that house, Socialist. + who wants to live in Jersey?

"An autumn of major layoffs awaits Wall Street, some say
For Wall Street's biggest banks, the upward revisions this season are for layoffs, not profits. As Bank of America on Monday announced plans to cut an additional 30,000 workers, experts said the total number of jobs disappearing from Wall Street this year could run into the six figures. Credit Suisse and Goldman Sachs have already started quietly letting workers go. Some banks are using a layoff strategy that gives workers a couple of months' lead time before their jobs officially go away." CNNMoney.com

http://money.cnn.com/2011/09/12/markets/wall_street_layoffs/?source=cnn_bin

And bonuses down ...

"European banks may resort to more jobs cuts or zero bonuses as they struggle to maintain fixed compensation levels amid deteriorating financial markets.
The companies are facing shrinking revenue and higher costs after raising base salaries of investment bankers by as much as 100 percent. That decision, which followed regulations to curb bonuses in the wake of the credit crisis, is irreversible even if conditions worsen, lawyers and consultants said, leaving banks with fewer options in their bid to improve margins."

http://www.bloomberg.com/news/2011-09-12/more-job-cuts-loom-for-european-banks-locked-into-higher-pay.html

It made me laugh when US Banks told the US Gvt that if they cut bonuses, talents would leave ....Where would they go?

Some HAVE gone to PE and hedge funds, or to smaller broker-dealers and i-banks not part of TARP. A few to banks that want to take advantage of these other big ones (Candian banks.) This I know for certain. But for every 2 that do that, one has no place left to go.

Hedge funds and private equity now have to report to the Fed. They're trying to get out of it, saying they're not "systemic." BS.

How exactly would a PE fund be a systemic risk?

same way ltc was--or citadel, when the fed told goldman to back off--and, these days, the investments of hedge/PE funds can be quite similar--in some ways the exposure with PE could be worse, given the often difficult MTM issues with their investments

PE and hedge funds are provided massive leverage by banks--when their investments implode, if they are big enough, banking system is threatened--

what am i missing?

Steve is correct that HEDGE funds have to report, but its NOT because they are systematic, its because they want to detect fraud, particularly in the OTC market. They just want data. They are NOT proposing capital requirements etc like with the banks.

Blackrock might be the one exception, as its SO big.

had to read that last sentence twice..

Its pretty clear that hedge funds can get to that level. They already have (see Long Term Capital). PE firms take on debt only at the portfolio company level (no recourse) and they do not mark to market so no unexpected calling of the loans, no liquidation of other assets to repay loans, etc. which is the fear with large hedge funds. The loans are also (supposed to be) made against hard assets, not stock, so the value doesn't disappear so quickly and diversified across industries.

"what am i missing?"

Carried interest.

Awww yes I forgot about LTC. Yes, that was viewed as potentially systematic, I partially retract. However, not all hedge funds would be viewed as so. Less than 1% I would assume.. But they need data to determine that. Had that had data warehousing and central clearing, LTC would not have even reached potential crises level.

As for blackrock - its merely that there BS assets are well over the $50B "systematically important" threshold - by about $128B. And they own hedge funds, among many other things.

Fidelity (FMR) is apparently not in that boat. Most other asset managers - even TRow and Franklin - are not even close to $50B.

"LTC would not have even reached potential crises level."

Yes they would have. They saw their collapse as a Black Swan event, which according to them had a chance of occurring like once every one hundred BILLION years. Of course things with the likelihood of occurring once every one hundred billion years happen all the time, but they forgot about that.

Bernie Madoff had a similar scheme, with the same advance planning. He just didn't use the Black Holes Theorem to support his fraud.