Bank Of America To Cut 3,500 Jobs

NEW YORK (AP) – Bank of America Corp., the nation’s largest bank, said Friday that it 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 investment bank Merrill Lynch and mortgage lender Countrywide Financial, 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 as the economy began to sputter in 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, 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 Merrill Lynch. That was a year after Ken Lewis, then Bank of America’s CEO, 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.”

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)


One Comment

  1. Les Robbins says:

    I have the name of a customer service representative plus her supervisor that need to be added to that list of 3500. they were total jerks and have caused the loss of my entire account just because they refused to reverse a $6.00 service charge.

    1. callen says:

      A large company like Bank of America does not really care about that, or you for that matter.

      1. tracy says:

        which is why they’re failing

  2. callen says:

    By Bank of America’s line of reasoning, they will achieve peak efficiency when their total staff number is reduced to only one employee. The problem with capitalism is that is all about Who will do the job for the least amount of pay? Think about it.

  3. fred says:

    When I was down and out, and had to chose to feed my family or make the mortgage payment, I fed my family. BoA called me 2 or 3 times a day, and they would say things like “you dont need to eat all the time” or “dont pay the gas bill, you can wear a sweater” I was suprised they said this stuff, and I was MAD I could not get recourcse for those BS calls. I am glad, very glad these folks are losing their jobs….at least they will know who is calling them now when they dont make the mortgage payments.. KARMA stinks…

  4. woody says:

    Bank of America is just a symptom of the larger problem. The larger problem is the Federal Reserve. The establishment media has been well compensated in hiding the fact that the Federal Reserve is the primary crime boss directing the action on the local level insuring their monopoly on your life, liberty, and labor. Their is a truth teller out there. Like the local bank teller who knows you, interacts with you, asks about your spouse and children, they honestly care about your well being. The equal to the truth teller on the AM Radio is here.

    1140 AM Talk Radio, Because You Can Handle The Truth

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