Filed under: Management, Citigroup Inc. (C), Goldman Sachs Group (GS), Economic data, S and P 500, DJIA, Bear Stearns Cos (BSC), Recession
As investors, we’ve been bombarded over the past couple of months with negative news coming from Wall Street banks that either underwrote, invested in, or had clients who invested in bad mortgages or some derivative of them. While these firms have written down billions in assets on their balance sheets, investors like Joe Lewis, the Australian billionaire who put $1 billion into Bear Stearns (NYSE: BSC) and promptly saw his investment drop almost 100%, have been left holding the bag.
Bloomberg is out this morning with an article which details some of the fallout from this process. According to Bloomberg, after the Internet bubble burst, 39,800 jobs at big banking firms were eliminated during the same period. The number climbed to 90,000 in the next two years, according to the Securities Industry and Financial Markets Association.
While not everyone cries over millionaire bankers losing their jobs, there is certainly fallout that hurts everyone dependent on a healthy economy. One recruiter interviewed by Bloomberg predicted that the total headcount reduction could be more than 100,000 in a few years. Lawyers, realtors, and mortgage brokers are feeling the heat.
According to Bloomberg, the biggest cutters have been:
- Citigroup 6,200
- Lehman Brothers 4,990
- Bank of America 3,650
I tend to think that from a cycle point of view, Wall Street cuts harshly only to rehire when things pick up.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
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