Wall Street Banks May Be Forced to Cut 35% of Jobs

Snore. Bloated banks trimming the fat. Lots more people scurrying to get into grad school or management consulting.

Next...

From my understanding, people that are getting cut are the folks in areas that have been hard hit by the credit market crisis: SPG, ABS, Fixed Income, M&A, etc.

Other areas like Commodities, Equities, Asset Management, etc. are going strong. Given that most firms are cutting back cash based bonuses by increasing more restricted stock options, I feel that firms are trying to retain as much quality talent as possible. That way, when the economy picks up again there will not be a shortage of qualified employees and firms will not need to go on a hiring binge similar to 4-5 years ago.

NYbylr - that was far too reasoned, mature, and calm for Steve. He will want you to come back with something a little more the streets will run red with blood...

Give him 10-30 minutes and he will have a mile long post about how the UN will be doing food drops on NYC soon. Except him. He will be sitting on millions.

Wall Street ALWAYS goes on hiring binges right before the market is about to fall apart. At Morgan Stanley we used to joke that you can time a bear market exactly at the point when MS has reached a record new hiring class. Its the same at all Wall street firms.

Smart Wall Street veterans know this and save their money during the fat years...Our business cycle is to sell a new investment idea that will generate profits without any risk (junk bonds, internet, mortgage bonds), watch all the suckers lap it up. and then the market implodes...the government makes us pay a fine that comes no way near equaling the level of profit we made and then the cycle starts all over again.

Like Chuck Prince said "If the music is playing ...you have to get up and dance"

I wonder what new product we will have next time around...maybe something to do with the sovereign wealth funds or maybe we'll just push commodities down everyone's throat

i don't know, what's up with that? is anyone denying that the banks are/will be laying people off?

Denial is more than a river!

classic stevejhx response

No one is denying the fact that banks are laying people off and will continue to be strict in increasing headcount.

I just feel it is disingenuous to discuss any type of figures without context. For example, if someone said to you WaMu is laying off 6% of its work-force (3000 employees) it would mean one thing. If someone said to you WaMu is laying off all 3000 employees from all of its 138 Home Loan Offices (a 6% total work-force reduction in the company), that would mean something else.

Also times like these are good for companies to start clearing out the underperforming employees that they couldn't get rid off when there was high volumes and good businesss.

Denial is more than a river!

No, Steve, what REAL value did that add?

Denial is more than a river - it's a way of life.

That's the full quotation.

Here's some snappy headlines from CNBC:

Merrill Likely to Write Down Up to $6.5 Billion More

Morgan Stanley: More Assets Illiquid or Hard to Value

Fed's Kroszner Says Home Loan Writedowns Needed

Fed Considering Additional Liquidity Measures

NYC real estate is about to come a screeching halt. Not only are people just unsure of their future and are waiting, but just wait until you see all the "IT" neighborhoods start to see foreclosures and then you will see them on the big island. I know several people who lived WELL above their means and could no way afford to pay their mortgage when they lose their job. It's terrible to think that people are facing their worst fears. I have said it before and will say it again. The problem is much worse then anyone wants to admit. You are going to start seeing buildings just stop construction. It will start with low level developers mostly in Brooklyn and Queens first and if the problem continues it will make it's way to the big island. Many banks are starting to pull financing from developers. They know that the down turn will result in the developers not being able to be profitable. They fear the developer will just default. If they already lent $20M, they are not willing to lend the other $20M to finish a product that has no market. The worst part for the developer is that he just can't go to another Bank, because they to don't want to buy is risk. The only hope is private equity, Good Luck.

Gee, dco, I thought I was the Fascist Bear. But you've gone further than I would ever go. Next stop: Planet of the Apes! :0

I have worked on the Wall St. for more than a decade, and my father for almost two decades before me...the sky is not falling, this is all normal for Wall Street. Sure we will go through a rough period for a few years, no doubt- but get over it- it's cyclical. As poster flmd stated "smart wall street veterans save their money during the fat years". So very true.

we can't hire enough people fast enough in the tech/web sector; there are 5 openings for every 1 candidate; as these certainly aren't "masters of the universe" jobs at avg salary of $150K to $250K there are alot of young people who can certainly afford a 1BR . . . yes wall street is a huge deal, but not everyone in the city works there (especially those of us below 14th street)

flmd, very good comment. My bet is on micro loans. MS has been making good money off of it. There are still tons of room to grow. In 5 years, that will be the hottest. And we will rob the 3rd world blind.

Have you noticed that most of the big money makers or really smart guys have either moved to london or china?

stevejhx- I'm very concerned that the truth of this problem is not being fully disclosed. Hardly anyone is even talking about Credit Card and Auto loan Debt. If unemployment continues to grow this debt will be double the loss that is possible from those who can't pay already. My analysis is based on many factors. One such factor not discussed by those on wallstreet is the effects on mainstreet. I know they refer to consumer confidence index, however that's not a true indication of the attitude of mainstreet. What worries me is that prices have gotten so high across the board that people are engaged in revolving debt that is unpresidented in history. What happens when the music stops and the banks cut off credit for those they believe owe more than they are able to pay.

. And to address Markznyc- I'm fully aware that many people have jobs that are not located on "wallstreet" however their are numerous studies showing that for every job lost on the street it results in 3 others some place else. I don't know what you do for a living but I would do some research and see how this will effect you in the future. You might find out that you are more reliant on wallstreet then you ever thought. NYC ecomonmy is more dependent on wallstreet than any other place on the plant. So if you think that this area is just fine then the brooklyn bridge is for sale. Don't laugh it may soon be.HAHAHA. We sell rights to name stadiums, why not landmarks. Just a thought. How does "the Mcdonalds bridge" sound. We can even put 2 huge golden arches on them.HAHA. Seriously I'm very concerned. The next huge shoe to drop will be the credit swaps and that is much larger than the subprime disaster. I truly hope not,a bad economy does nobody any good. That's why I'm very concerned. Above all I do not trust the word of any CEO and the FED. Think about it, they have every reason to lie and none to tell the truth. I'm in the business of telling when people lie and this one was an easy call.

"we can't hire enough people fast enough in the tech/web sector; there are 5 openings for every 1 candidate; as these certainly aren't "masters of the universe" jobs at avg salary of $150K to $250K"

markznyc, where on earth are you getting these statistics from? AVERAGE for tech/web of $150k to $250k for all of Manhattan?

Show me. In fact, just go to Dice.com and try searching for IT in the city that pay $250k for example. Tell me what you find.

Show me exactly where you get this AVERAGE of $150k to $250k for web/IT in Manhattan that IS NOT in Investment Banking or Hedge Funds.

SHOW ME THE DATA. F the BS numbers people throwing around in here. GIVE ME A LINK.

"we can't hire enough people fast enough in the tech/web sector; there are 5 openings for every 1 candidate; as these certainly aren't "masters of the universe" jobs at avg salary of $150K to $250K"

markznyc, where on earth are you getting these statistics from? AVERAGE for tech/web of $150k to $250k for all of Manhattan?

Show me. In fact, just go to Dice.com and try searching for IT in the city that pay $250k for example. Tell me what you find.

Show me exactly where you get this AVERAGE of $150k to $250k for web/IT in Manhattan that IS NOT in Investment Banking or Hedge Funds.

SHOW ME THE DATA. F the BS numbers people throwing around in here. GIVE ME A LINK.

"we can't hire enough people fast enough in the tech/web sector; there are 5 openings for every 1 candidate; as these certainly aren't "masters of the universe" jobs at avg salary of $150K to $250K"

markznyc, where on earth are you getting these statistics from? AVERAGE for tech/web of $150k to $250k for all of Manhattan?

Show me. In fact, just go to Dice.com and try searching for IT in the city that pay $250k for example. Tell me what you find.

Show me exactly where you get this AVERAGE of $150k to $250k for web/IT in Manhattan that IS NOT in Investment Banking or Hedge Funds.

SHOW ME THE DATA. F the BS numbers people throwing around in here. GIVE ME A LINK.

relax mmafia, you're acting like a cracked out ho.

I'm also in tech and I agree with markz about the fact that there is a severe lack of talent and too many spots open. In my experience hiring a good software person in NYC requires about 120k-140k base with 20-40k bonus.

THE IT FIELD IS ALWAYS HIRING. tHE PROBLEM IS IF YOU LOSE YOU JOB TODAY NOT EVERYONE CAN GET AN I.T. jOB TOMORROW. i'M NOT IN I.T. BUT I WOULD VENTURE TO GUESS THAT THEIR IS SOME EDUCATION REQUIREMENTS AN DEXPERIENCE NEED TO GET THE JOB IN THE FIRST PLACE. I DON'T SEE WHY THIS EVEN MATTERS. ARE YOU GUYS SAYING THAT THE NYC REAL ESTATE MARKET WILL BE SAVED BY I.T. JOBS THAT PAY $150.000. I HAVE FRIENDS THAT ARE IN THE I.T. FIELD AND VERY FEWW ARE ACTUALLY MAKING THAT KIND OF MONEY. HOWEVER THAT'S NOT REALLY THE POINT. THE POINT IS THAT GOOD AND GREAT PAYING JOBS ARE BEING LOST BY THE THOUSANDS. i WOULD BE CURIOUS TO KNOW HOW MANY I.T. PEOPLE WILL LOSE THIER JOB'S BECAUSE OF THE SUBPRIME DISASTER. SERIOUSLY CAN ANYONE GIVE AN EDUCATED GUESS TO HOW MANY I.T JOBS COULD BE LOST AT BEAR STERNS. MY GUESS IS ALL COULD ACTUALLY BE LOST. ANY TAKERS?

dco, I don't know much about general IT jobs but your comment about Bear Stearns is way off base. How many IT folks do you think are needed to integrate JPM with Bear? IT folks at Bear have nothing to worry about for at least the next 24 months. For every integration, carve out, merger, etc. you need twice as many IT people than you would for day to day support.

If you go here:

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1166212623TLGNp&Record=44

You will see that since about 2000, the average per-person Wall Street bonus was around $140,000. Not evenly distributed, of course, but on average. When bonus = total net pay, as in the case of Wall Street vs. IT, there is no way that IT salaries can make up for Wall Street, especially because IT is easily transferable to India and other places.

That chart also shows quite clearly how median property prices are correlated almost 100% to Wall Street bonuses. Take away the income, and prices drop. (Which is what I've been saying all along.)

Actually, JuiceMan, not that many people are needed to integrate the two IT platforms, since most of it is duplicated. JPM will choose which system is better - theirs or BSC's - and migrate in both directions.

I have a friend who works at Bear (until next week) and she says that the environment has been horrendous since December. She got a job at Merrill, starts next week, but because she's leaving before JPM wants her to, she got screwed on severance. JPM has structured severance to encourage people to stay as long as they're needed (which is what BofA did when I worked there and they were shrinking); you don't stay, you don't get a package. But the decision is: if I can get a job now, why should I wait and perhaps get screwed in the end? Especially since the BSC people already feel they're being screwed by JPM - they don't trust them.

After the dot.com bust, lots of people left NYC for Charlotte, to work for BofA and Wachovia. That may very well happen again.

"Actually, JuiceMan, not that many people are needed to integrate the two IT platforms, since most of it is duplicated. JPM will choose which system is better - theirs or BSC's - and migrate in both directions."

Good lord steve, you have a comment for everything don't you? When you say "migrate in both directions" what does that mean exactly? Is there an easy button in the broom closet that does all of that "migration" for you? 24 months, lots of IT people. No question.

Actually, MightyJuice, I was actively involved in the IT integration process as an auditor and management consultant for Price Waterhouse and Bank of America. The decision is this: they look at duplicate systems, decide which is better, and migrate in that direction. So if BSC has a better trading platform than JPM, they migrate their data to BSC's. And the opposite is true. Migration is for the most part a matter of mapping data, which is a rather simple task, since all the systems process almost all the same data. Once you know which data element goes where in the target database, you then convert one database into the format of the other and merge them. That's all.

There are other issues involved, of course, primarily accounting, since the firms may apply different accounting rules for similar transactions. It will probably take 12 months or less, and will not require all the BSC people or the JPM people. Management will make a decision on which systems to use, and the development and DB people will identify the data elements and map them, then test. I did it dozens of times.

ok steve, you are way oversimplifying it, but let's not turn this thread into an IT discussion. It's a big effort for numerous reasons and will take more people than less (exactly how much neither of us know). Let's move on.

They'll probably drop the BSC systems, even if it is better. Given how small BSC is, it'll probably just be easier to have them learn to use JPM systems and migrate BSC data over to JPM.

JM, the first thing they do is identify exactly what work has to be done and identify whom they want to do it, give them a huge bonus to stay, and fire the rest. I've seen it done dozens of times, it's not a complicated process. It's about as difficult as Y2K was. For the most part applications do not require major overhauls; they migrate the data.

If you have better qualifications in this regard than I do, tell me what they are. The first time I was involved in it was as a technical auditor at BofA in 1985, when we migrated local System 34-based systems to mainframe IMS systems in Miami adapted from a system developed in London, then migrated that system to California-based systems before eventually doing away with them. Even back then the migration process only involved a few people; now most of it is automated. They moved telecommunications from Miami to San Francisco in 1987 - it took about 3 people, everybody else was fired. None got transferred. They don't need duplicate networks, they don't need duplicate hardware, they don't need duplicate systems. That's why they do it: cost savings.

Don't say that I'm way oversimplifying something I've done before that you haven't. I was in the trenches.

steve, you have done everything before right? Do you think being involved as a PWC auditor during a data mapping exercise (1/1000 of the actual migration effort) qualifies you as an expert in anything? Data mapping? Seriously steve?

How many different systems do you think JPM uses? Do you think JPM uses the all of the same systems for the same functions globally? What functions at Bear will need what systems? Globally? What are the security considerations? Where are the data rooms? Where is the support structure? Who does what now from a support perspective and how will they support these systems going forward? What do you do what all the hardware? If portions of both businesses are outsourced what do you do then? What systems are customer facing? How will changes to one system or another impact the customer? What systems are used for back end administration? How do those processes and procedures differ from firm to firm? How will you consolidate (financially)? What systems will be used to do this? Who will train everyone on the new systems? What suppliers are you going to use for what products? What will the new contracts look like? Renegotiate? What systems from Bear have to stay? How will JPM’s infrastructure handle the extra data load? What will need to be done to insure this?

Steve, I could go on and on, there are hundreds of things to consider on a very long and complicated checklist. I am not an IT expert (but much more qualified on this subject than you are), however I am an expert on global restructurings, carve outs, and merger integrations. So please steve, shut the hell up about your data mapping experience and your "qualifications" and move on.

“Don't say that I'm way oversimplifying something I've done before that you haven't. I was in the trenches.”

Data mapping is not in the trenches steve, its work that the Big 5 gives to recent college grads to chew up billable hours. You have no idea what being “in the trenches” is and you are way out of your league here.

Actually, JuiceMan, I do know what I'm talking about because I not only worked on BofA, but also on Chemical, Chase, Barclays, Lloyds, UBS, First Boston, Burroughs Welcome, Hoffman LaRoche, Telefonica de Espana, Visa International, and I could go on and on, and I was a senior IT audit manager and managing consultant for Price Waterhouse, and have worked in some 30 countries. If you absolutely, positively must know, my expertise is in financial applications including derivatives, clearing and settlement, electronic trading platforms, and computer network security.

If you don't know what RACF is, or how Sybase works, or the intimate details of SNA, TCP/IP, Ethernet, token ring networks, JCL, ISDN, then JUST SHUT UP, because you don't know what you're talking about.

I did not do the data mapping myself, to let you know, and I was a bank auditor who only ever stepped foot in a vault once. I've helped design applications, configure networks, and audited the most sophisticated platforms in the world. That's why I do what I do today - I translate the very documents I used to write myself, because I know what they do. In fact, I'm working on a job for BMC right now.

I don't pretend to know how to do what you do, but I do in fact know a lot about this subject. Do I know the specifics of what will be done in the merger? No. Do I know how it's done and relatively how many people will do it? Yes. It always works the same way.

..snore.....

hahahahhaha, you're an IT guy Steve...

i could have guessed.

JM, go to:

http://www-03.ibm.com/servers/eserver/zseries/zos/racf/

Read about it. It's what I did. It's the most sophisticated IT product there is, because it interfaces with every single element on a computer network. Therefore, you have to know how they all work to know how this works.

So good at it was I that I got a full expat job with BofA in London at the ripe old age of 27, and traveled all over the world. I don't pretend to know what you do, but I do know about this.

I've closed data centers, moved data centers, automated data centers, audited data centers, worked in data centers. If you don't know how the things work, you have no basis for your claims. And as usual, like your "interest rates will be 0.5% in 7 years," you have no basis for your claims.

Half the BSC IT people will be gone in 6 months. Maybe 25% of them will keep their jobs in a year. This isn't "out of college" stuff - I do the Big Time. Sorry it makes you envious.

jenny9823, I agree. I tried to move on, but Mr. Arrogance had to try and be right and now he looks like an idiot, which I am really enjoying.

Steve the tech guy! I love it...

Quit it with your BS...BofA's only real presence in NYC before the dot-com blowup was in INVESTMENT BANKING. No one "moved to Charlotte" - in fact, they shut down most of their Charlotte (and Chicago) investment banking business at that time and consolidated it in NYC.

Yes, many people will be (and already have been) fired on Wall Street this year, but that doesn't mean they will be leaving NYC. Most people losing their jobs are already very, very wealthy. Sure, they won't be buying a new place this year, but that doesn't mean they need to sell either.

Oh, and not everyone in finance will be hurting either...I am in finance, and am 100% confident that I will be making more this year than last.

Steve the "hi, i'd like to install something on your computer, is now a good time??" cum RE expert.

But, what a moron I was to sit and actually debate with him...so big joke on me.

Steve, it sounds like you had trouble holding down a steady job. Probably why you still rent.

evillager, I didn't work with BofA in New York. I worked in Miami, London (Bromley, Kent, actually) and San Francisco, but traveled throughout the world.

I never said anybody would be leaving NYC. I said they did in the past because BofA and Wachovia were hiring when NYC banks were firing. And I didn't say that BofA people were transferred; I said that displaced NYC workers for other banks moved. I know some.

"Most people losing their jobs are already very, very wealthy."

Really? On what do you base that?

I'm the moron, and evillager is making blanket statements like that?

JuiceMan made this ridiculous statement: "When you say "Is there an easy button in the broom closet that does all of that "migration" for you? 24 months, lots of IT people. No question."

He doesn't know what he's talking about. Go here:

http://investor.shareholder.com/jpmorganchase/press/releasedetail.cfm?ReleaseID=211804

Chase Completes Conversion of 4.7 Million New York Tri-State Accounts
One of industry's largest conversions continues series of successful technology, operations upgrades

NEW YORK, Sept. 21, 2006 – Chase, the largest consumer bank in New York, announced today it has successfully upgraded its products and technology in the New York Tri-state area to link together the company's full network of 2,660 branches in 17 states. The conversion of 4.7 million accounts in New York, New Jersey and Connecticut continues a series of successful product, technology and operations upgrades since the 2004 merger of Chase's parent, JPMorgan Chase & Co. (NYSE: JPM), and Bank One.

Those two banks merged their holding companies on July 1, 2004, and by September 21, 2006 the integration was complete. That was a FAR LARGER operation that JPM's take-over of BSC. Thousands of branches in 17 states, all sorts of retail and wholesale banking applications and redundant hardware.

JuiceMan has NO CLUE what he's talking about. So it's time to just SHUT UP.

And then: it is likely that a lot of JPM's IT jobs are not in NYC, which is expensive. BSC is a NYC-centric organization. When Disney moved its IT center from NJ to Orlando, 3 people went. The rest got fired.

evillager, I've had the same job for the past 15 years. One more theory bites the dust.

Are you sure you didn't work in Slough? That's the pit where most firms put back office types. Like you, Steve.

That merger was over 24 months steve AND they probably had months to plan before the deal actually closed. JPM had a week! No clue? Ha ha ha ha ha ha. I can see you furiously looking for stories on the internet to try and prove me wrong. How much data mapping was done there steve! Push the easy button! Give it a rest big boy, you are out of your league here! Move on son!

Sure of it. The data center was in Croydon, the operational staff were in Bromley (Kent), and - at the time - the main branch was at No. 1 Cannon Street. I then moved over to Price Waterhouse, No. 1 London Bridge.

No comment on how long it takes to migrate computer applications? They put new development on hold, redeploy the staff to the conversion, identify who's going and when they're going, and good-bye.

You guys are truly out of your league.

MightyJuice, besides that it's published, I have inside information from BSC: JPM is already in charge, even though the takeover isn't effective yet. Ha ha ha. I didn't need to search furiously for that article. One click - the easy button.

Then, if you read the article, this was only part of the effort, of what they were doing. And then, the merger was announced on January 15, 2004. It was approved in April or May (don't remember the exact date). And this was the largest integration ever attempted at the time.

Regarding Bear, JPMorgan already has a close business relationship with BSC, which is why they were chosen. It was published. If I recall correctly JPM is BSC's clearing bank, so they know quite a bit about what they do.

And as regards other bank mergers, from http://www.bizjournals.com/philadelphia/stories/2004/08/30/daily3.html

Bank of America has been curtailing Fleet's numbers, however, as part of an overall reduction of 13,000 jobs nationally as part of the merger. On Aug. 18, Bank of America said it was laying off hundreds of employees across the Northeast as part of the conversion of Fleet branches to the Bank of America model.

In fact, more people than that were laid off, and there was VIRTUALLY NO OVERLAP between the two banks' physical footprint or operations.

As usual, you're full of hot air. Show me SOME PROOF of how many EXTRA people it will take to do this integration, and how long it will take.

Because you have none.

Yep, I don't know anything about Wall Street,and apparently little about real estate, but I do know two things:

1) MMafia you have moved beyon annoying to pure d-bag status.

2) Unlike most of the progosticators, my comment was on something that I actually do for a living.

Here is my data. I run a web business. I am fighting over 27 year olds who want base salaries fo $200K to sell web ads. for every 3 programming job there is a sales guy that has to pay his salary through ads sales supports him. Unlike the dotcom bubble of 2000, the VC$ is sitting nice and tidy in company accounts and burn rates are low. The web ad business is growing at 20% a year and the impending recession will actually help this growth as $ move from high cost media to more accountable media. If you don't believe that, then I guess you would be reading a newspaper rather than posting on an ad supported web board.

Wall Street will have an impact, for sure, but my original comment simply said that everyone doesn't work there, and that there are pockets of growth.

that explains it markz - I thought you seemed like broker material and indeed everyone I've interviewed from web ad firms was top notch sleaze. Sys admins who offered to sell me their firm's source code, a developer who was starting his own ad firm without telling his employer... awesome people really.

What the hell are you talking about? I run a web business. How do you think Yahoo and Google make money? Source code? Very silly comment. The smartest people I know (like the StreetEasy guys) are doing great things (like this site) that are web collaboration tools, supported by advertising.

We have now reverted to defending MMAfia and calling names. Unless you are MMafia.

Foolish comment.