The knives are out on Wall Street,, the cyclical ritual has begun. First the story is that the firms are excising businesses and people who were there only by dint of being in the right place during the frenzied upswing, but truth be told, really aren’t up to the firm’s standards, or so goes the party line.
Then in the succeeding waves, the next target is the mid level people, who are comparatively costly but deemed to be replaceable. Then the firm starts cutting people it knows are valuable, but has decided that the overall headcount has to reach a talismanic number, no matter what it takes to reach it. Subsequent firings depend on politics and caprice. Did the boss see you at your desk early? That might win your points for dedication, might lose them because it is seen a sign of desperation, or might merely have the unfortunate effect of reminding him you exist when he needs to draw up a new hit list.
As in the past retrenchments, the point comes where being fired, while still a huge ego blow, is no longer a scarlet letter of career dishonor. Too many known-to-be-good colleagues have also been dumped. And even though the firms freely admit they cut too deeply the last time around and resolve not to do so again, they are unable to contain themselves.
This Bloomberg story reports that Morgan Stanley, Credit Suisse, and Lehman are eliminating a total of 1,640 jobs. Small beer so far, unless you are one of the ones tagged to go. But we are still early in this process. Peak to trough, employment in the securities industry typically falls 20%.
Interestingly, the cuts at Morgan Stanley include asset management, which is not an area obviously affected by the credit contraction.
The story also give a tally of job losses at big financial players, which is useful, but that lumps in people like mortgage brokers at Wachovia with Masters of the Universe. I’d be very curious to see a breakout of cut from institutional versus retail businesses. From Bloomberg:
Morgan Stanley, Lehman Brothers Holdings Inc. and Credit Suisse Group are eliminating about 1,640 jobs as the worst U.S. housing market in 26 years slows economic growth and their profit outlook.
Morgan Stanley’s cuts will affect asset management, retail brokerage and support areas such as technology and administration, said a person familiar with the firm’s plans. The positions at Lehman are concentrated in structured finance, commercial real estate, securitization, trading of mortgages and collateralized debt obligations, a second person said….
Credit Suisse, the second-biggest Swiss bank, said today it’s cutting 500 investment banking jobs, mostly in equities and fixed-income units. The cuts are “due to market conditions and projected staffing levels required to meet client needs,” according to the statement e-mailed today by Bruce Corwin, a spokesman in New York.
Lehman, the largest underwriter of mortgage-backed bonds, has already cut 3,750 jobs at subsidiaries that make home loans and shut down one of them last year…
The new cuts at Morgan Stanley, which will take place over coming weeks, equate to about 2 percent of the 48,256 people that the firm employed at the end of November….Lehman’s cuts represent about 4 percent of the headcount in the fixed-income division…The Credit Suisse reductions will trim 2.5 percent of jobs from its investment banking division, which had 20,300 employees at the end of September, according to the company’s Web site….
The following is a table of jobs eliminated by the biggest banks and securities firms due to the collapse of the subprime mortgage market.
Firm Number of Jobs Cut
Lehman Brothers 3,890
Bank of America 3,650
Washington Mutual 2,600
Morgan Stanley 1,900
Bear Stearns 1,550
Merrill Lynch 1,000
National City 900
Wells Fargo 500
Deutsche Bank 370
Credit Suisse 820
JPMorgan Chase 100