Bank of America to cut 16,000 jobs
Is this the recovery we’re all still patiently waiting for?
Bank of America Corp. BAC -1.08% is accelerating a broad cost-cutting plan and has set a target of shedding 16,000 jobs by year’s end—cuts that would see the company relinquish its title as U.S. banking’s largest employer.
The reductions for the final six months of the year, outlined in a document given to top management, are part of a larger effort to retool Bank of America into a leaner and more focused enterprise. The plan is designed to make the company take less risk, generate more revenue out of existing customers and use an investment banking operation inherited from Merrill Lynch & Co. to become a major deal maker around the world.
Chief Executive Brian Moynihan is trying to speed the company’s transformation into a smaller and more efficient operation as he tries to persuade investors that expenses can be adjusted to compensate for revenue lost to new regulations, an uneven economy and shaky markets.
In other words, BoA does not expect unemployment to come down or the economy to significantly improve. It also is struggling as a result of regulations such as those contained within Dodd-Frank. These are woes that can at least partially be attributed to President Obama. According to some analysis, the overall compliance industry currently absorbs 10% of U.S. GDP. Is that truly necessary?
This is an issue where Mitt Romney provides a real contrast to President Obama: Romney would repeal Dodd-Frank. The real tragedy of overregulation is that that nature of what the government is doing is often totally opaque to the public, but the promises of what will result from it made by politicians are not. Obama can look like a hero by going around to economically depressed communities and telling them he saved vulnerable consumers from the evil banks. But conversely, repealing financial industry regulations is not an issue with any emotional appeal. Mitt Romney will sadly never face an adoring crowd, clamoring for repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Screaming fans will never line up outside campaign rallies with signs that say, “WE LOVE YOU MITT!!! Repeal Dodd-Frank 2012!”. But the 16,000 about-to-be unemployed Bank of America workers may wish the concept didn’t sound outright silly soon enough.