Opinion Brief

Will cutting 30,000 jobs save Bank of America?

The struggling banking giant tries to save $5 billion a year by laying off 10 percent of its staff

Bank of America, the nation's largest lender, announced on Monday that it will cut 30,000 jobs — 10 percent of its workforce — over the next few years. The layoffs should save the company $5 billion annually by 2014, as the massive bank trims its consumer, small-business, credit card, and other operations to focus on international and corporate lending. The news boosted Bank of America's battered stock, but BofA is still facing billions in damages from its purchase of Countrywide Financial and all its toxic loans. Will the job cuts put Bank of America back on track? 

This is a necessary first step: This "is a fairly significant downsizing," says Bert Ely at PBS. But it will take a lot more than this to fix things. Bank of America has the same problems as the rest of the industry — declining revenue and bloated expenses. The big difference is that compared to other banks, BofA has "those problems in spades." Bank of America can survive, but "it's going to be a long, hard slog."
"Amid major job cuts, is Bank of America 'too big to manage'?"

Bank of America should fix its legal problems first: This streamlining "may be for naught," says William Alden at The Huffington Post. Bank of America is facing massive lawsuits — insurer AIG alone is demanding $10 billion for losses on mortgage-based securities — and the savings from job cuts could be erased by a single defeat in court.
"Bank Of America job cuts fail to address looming legal costs, experts say"

This won't solve the real problem — excessive government regulation: It's a no-brainer that Bank of America, and every other bank, "needed to shrink after the bubble years of easy money," says The Wall Street Journal in an editorial. But the thing that made such a massive layoff necessary was punishing overregulation. Last year's Dodd-Frank financial law, for example, limited the "swipe fees" banks can charge merchants when customers use debit cards. That cut into banks' profits, and now 30,000 workers are paying the price.
"The Dodd-Frank layoffs"

Recommended

The daily business briefing: June 8, 2023
New York City wreathed in hazardous wildfire smoke
Business briefing

The daily business briefing: June 8, 2023

Will Apple's $3,500 VR headset take off?
Vision Pro headset
Today's big question

Will Apple's $3,500 VR headset take off?

Why is Riyadh going it alone on oil cuts?
An illustrated image of oil rigs and oil barrels
Today's big question

Why is Riyadh going it alone on oil cuts?

Jamie Dimon 2024?
Jamie Dimon on Capitol Hill
Profile

Jamie Dimon 2024?

Most Popular

Ban the Bible?
Holy Bible.
Briefing

Ban the Bible?

What is Mike Pence thinking?
Former Vice President Mike Pence on a motorcycle
Talking point

What is Mike Pence thinking?

CNN CEO Chris Licht steps down
Chris Licht
so long

CNN CEO Chris Licht steps down