New York City to Lose 10,000 Financial Jobs

New York State Comptroller Thomas P. DiNapoli has released a report that says Wall St. will lose 10,000 jobs by the end of next year. This is part of the normal cycle big financial firms go through and therefore is unavoidable. The newly unemployed financiers can join the protesters in southern Manhattan as they rally against the pay packages of bank CEOs and traders.

There are no surprises in the DiNapoli document, at least not for anyone who has looked at earnings forecasts for banks and the stock prices of financial firms.

The two best examples of Wall St. troubles are Bank of America (NYSE: BAC), which serves consumers and businesses across the country, and Goldman Sachs (NYSE: GS), which largely serves the need of the world’s biggest companies, as well as makes money from its own trading operation.

Bank of America has been hurt badly by the huge remnant of its mortgage portfolio. A near-panic about the bank’s prospects has pushed its share price from a 52-week high of $15.31 to just above $6 recently. The bank already announced it will cut 30,000 jobs. A great number of these will not be in New York City. But the lay-offs indicate how badly the industry’s earnings have suffered recently.

There are rumors Goldman will fire more than 1,000 people. Investment bank and underwriting fees are down because of choppy markets. Goldman has not had its traditional success trading its own accounts. Like Bank of America, it is the goal of Goldman’s management to preserve profits. People are among the few “items” that can be quickly taken off the expense side of the ledger.

DiNapoli’s report concerns itself with New York City, but his predictions are a sign of what will happen to the financial industry across the country. Banks have reached another difficult period. It has not been, and probably will not be, as bad as in 2008. But it will be bad enough to put tens of thousands of people out of work.

Douglas A. McIntyre