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Bank of America Death Watch – Mass Layoffs Imminent

It’s really amazing to me that nobody has connected the slumping stock market with the fact that one of the four major US banks is on life support. There are 30 stocks in the Dow Jones Industrial Average. Bank of America is one of them. They’re down close to 50% on the year. That cannot be a non-factor.

The warning signs for Bank of America are all there. The liabilities are rising. The lawsuits keep coming in. The Knights of Columbus actually expanded their challenge to the large settlement on mortgage backed securities, another signal that the get-out-of-jail free card that BofA sought is not forthcoming. They’ve desperately tried to cut operating costs without resorting to raise capital, which would be given away cheaply because of the stock price. They started selling various units, a Canadian credit card company, some commercial real estate properties, everything non-core that wasn’t nailed down. And now, they plan to cut labor costs.

Bank of America is set to eliminate at least 3,500 jobs in the coming months, as the beleaguered financial giant seeks to cut costs and restructure amid deepening shareholder dissatisfaction.

With its stock down more than 50 percent since January, the job cuts by Bank of America may be only the start of a broader restructuring at the company, which is the nation’s largest bank. Brian T. Moynihan, the chief executive of the bank, has said that he hopes to trim quarterly expenses by $1.5 billion. Thousands more job cuts are likely in the months ahead.

“I know it is tough to have to manage through reductions,” Mr. Moynihan wrote in a memo to the company’s senior leadership late Thursday that outlined the cuts. “But we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully.”

The total job cuts could reach 10,000. And they have already cut 2,500 jobs in the first seven months of the year.

This isn’t a factory making these cuts; it’s a BANK. Maybe their operating cutbacks will keep them in the game another week, but we’re talking about tens of billions in liabilities. No amount of furloughed bank tellers will make up for that.

Not only that, but they have structured a $1 trillion “bad bank.”

Bank of America Corp. (BAC), the biggest U.S. lender, named Ron Sturzenegger to stanch losses at its unit managing about $1 trillion of shaky or soured home loans after Terry Laughlin was promoted to chief risk officer.

Sturzenegger, 51, formerly global leader for the bank’s real estate and gaming corporate and investment banking unit, reports to Chief Executive Officer Brian T. Moynihan as head of legacy asset servicing, according to a memo sent to employees today. Laughlin starts as chief risk officer immediately, said the Charlotte, North Carolina-based bank, which announced his promotion last month […]

Bank of America is the biggest U.S. servicer of home mortgages, a business that handles billing, collections and foreclosures. The legacy unit services about 7 million loans that are either delinquent, defaulted or considered susceptible to failure, with roughly $1 trillion in unpaid balances, said Dan Frahm, a bank spokesman.

Are you feeling the desperation? Let’s not even talk about the fact that Terry Laughlin, who ran the foreclosures unit, is now the chief risk officer.

You’re entitled to feel schadenfreude if you want. I actually don’t; I want these managers to be sacked and their bonuses clawed back, but this is bad news for the country on net. But if you want to actually know what’s draining the economy, or at least contributing to the woes in the stock market, it’s the same thing that has been for half a decade now: Big Shitpile. Bank of America can’t shake it. They tried fraud, they tried ending due process, who knows, maybe they tried hiding a staffer in Congress under an assumed name like Goldman Sachs. But nothing has worked. There are losses in the system, and BofA can’t eat them or they’ll go under. And they’re freaking out that they cannot get out from under the liability.

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Bank of America Death Watch – Mass Layoffs Imminent

David Dayen

David Dayen