Lehman layoffs cap a bad week for Wall St. jobs

Aug.28, 2008 in Market Outlook

Lehman, Merrill shut the door

Commentary: Job cuts, smaller bonuses and scorn on tap until yearend

By MarketWatch

Last Update: 8/28/2008 3:15:00 PM

NEW YORK (MarketWatch) — If America has any pity left for the Wall Street
banker, it was directed Thursday at the bankers of Lehman Brothers Holdings Inc.

Reports said the battered Lehman (LEH) is planning to cut 1,500 jobs. A spokesman
for the investment bank declined comment but said a cut in that range would
represent 5.7% of Lehman’s workforce as of May 31.

Those cuts, combined with the hiring freeze announced by Merrill Lynch & Co.
(MER) at the beginning of the month, are the latest signals that Wall Street is
getting its comeuppance by shedding thousands of jobs and seeing compensation
slashed.

More than 40,000 jobs have been shed in the last 12 months, and some estimates
say that number could double during the next year. The latest survey by Johnson
Associates estimates those who survive will see bonuses fall by 15% to 25%. Some
bankers can expect their yearend compensation to fall 50%.

And don’t forget the chief executives. Three of the top eight big Wall Street
firms have new CEOs. One, Dick Fuld at Lehman, is hanging by a thread. One of the
firms, Bear Stearns Cos. doesn’t even exist anymore, its employees’ fortunes
erased in the process.

Executives, many of them new to the job, are delivering the message that there
simply isn’t enough left to go around. Of the roughly $250 billion Wall Street
profit made between 2004 and 2007, half has been all but wiped out by asset
write-downs.

The value of U.S. brokerages, as measured by the Amex Securities Broker/Dealer
Index ($XBD) has tumbled 50%.

Wall Street probably isn’t going to win sympathy from an America struggling with
foreclosures, $4-a-gallon gas and a stock market that’s touched bear market
territory.

But the nation shouldn’t get too selective about who it admits to the pity club.
Misery loves company, and Wall Street qualifies.

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