Wall Street firms cut 34000 jobs, most since 2001 dotcom bust

Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001. Securities firms started eliminating positions in mortgage departments as early as last July, when rising delinquencies on home loans to borrowers with poor credit histories led to a decline in the prices of bonds tied to the loans. So far, Citigroup has eliminated 1.7% of its workforce, while Lehman has chopped 18%. Morgan Stanley has cut 6.2%, and Merrill has eliminated 4.5%.

The collapse of the subprime mortgage market last year and the ensuing credit contraction have saddled the world's largest financial institutions with at least $200 billion of writedowns and losses. Bear Stearns, once the fifth-biggest U.S. securities firm, became the emblem of panic on Wall Street when it was forced to submit to an emergency takeover backed by the Federal Reserve as clients and lenders deserted the company. More bank losses are likely, according to analysts. "This crisis is much worse than 2001 and we don't know how long it's going to last," said Jo Bennett, a partner at executive search firm Battalia Winston International in New York. Job cuts "could be more than 100,000 in a few years."

Compared with the fallout after public markets slammed shut on speculative Internet companies in 2001, more high-level Wall Street executives are losing jobs in the current crisis, according to Gustavo Dolfino, president of New York-based executive search firm Whiterock Group. When the dot-com boom ended, the people who lost jobs were predominantly rank and file, he said. After the Internet bubble burst, 39,800 jobs 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.

- Layoffs, retrenchments, downsizing, whatever you want to call it. Chop a thousand jobs here, chop a thousand jobs there. The numbers are adding up pretty quickly. The body count is rising. Note what I said earlier about finding jobs in the finance industry. Major banks and financial institutions are writing down tens of billions of dollars seemingly every other day, their assets are shrinking, the remnant values of these assets are highly suspect, and some people are still hankering after those handsome bonuses that were handed out in a bygone era? Come on. Try some other sector.

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