Job Losses
More job losses at the top ranks of Lehman Brothers are no surprise. Some executives are weary, just like their customers and most other Americans. Lehman Borthers is shaking up its top ranks amid deepening concerns about the firm’s financial health. Just before the market opened, New York-based Lehman said its president and the architect of its growth spurt in the middle of this decade, Joseph Gregory, will step down and be replaced by equity trading head Bart McDade. And the executive who has led Lehman’s aggressive defense against questions about its accounting and balance sheet, finance chief Erin Callan, will step aside in favor of co-accounting chief Ian Mowitt.
Citigroup reported Friday a first-quarter net loss of 5.1 billion dollars, hurt by at least 12 billion dollars in write-downs amid soured subprime investments, and said it would cut an additional 9,000 jobs. Will Citigroup look for reasons to raise credit card rates, as we see with other banks involved with subprime? Although Citigroup has some cards with rates at 1.99 and 3.99 percent, we do not expect Citigroup to react like HSBC has in many cases. HSBC often raised credit card rates to 29 percent with no explanation other than “business reasons.” Of course Citigroup will raise rates if the cardholder misses a payment.
More job losses are forecast for the banking industry, just as some thought the situation was under control. For the first time in 40 years insitutions that take deposits, make loans, etc, are experiencing a downturn. Analysts at the financial research firm Celent LLC said in a report Tuesday that it expects the U.S. commercial banking industry — essentially, all companies that lend or collect deposits — to lose 200,000 of its 2 million jobs over the next 12 to 18 months.
Goldman Sachs is expected to lay off up to 15 percent of its work force, from its capital markets division and related support staff, the New York Post said on Friday. Employees were first notified about the cuts on Monday, with most of them taking place by the end of March, the Post said. It said Goldman employs about 32,000 people. The report did not give the number of people effected, nor did the report say how many Goldman Sachs employees work in its capital markets division.
Layoffs continue in the mortgage sector, even in Great Britain as Northern Rock staff are to be told that about a third of the 6,500 workforce faces the axe, as the nationalized bank starts paying the taxpayer and complying with European state aid rules, the Financial Times said.