Busted: Bankers and The Global Economy

April 5, 2008

Banking Sees Downturn In Revenue Growth

For the first time in living memory, the U.S. commercial banking industry faces a decrease in growth and revenue, resulting in the need for draconian cuts. As additional proof of a flaring crisis early last year, the entire financial services sector, consisting mostly of commercial banks, quietly fielded job cuts that totaled a record 153,000. This is expected to be followed up with another 200,000 job losses in the banking industry alone and the effects from the subprime crisis set in. Considering that approximately 2 million jobs exist within the U.S. commercial banking industry, a job loss of 10% in one year is noteworthy.

Financial services companies collectively announced in January of 2008 that they were cutting 16,000 U.S. jobs and would remove 6,000 more positions in February. March figures at this date are unavailable. August of 2007 saw a peak bloodletting level of 36,000. Labor market analysts expect an increase in cuts this year as the economy worsens and further cost cutting measures are required. Despite huge losses in the double-digit billions, the industry is resisting significant layoffs. Larger layoffs in the securities industry are expected as well with the collapse of Bear Stearns. Huge layoffs in the tens of thousands from any one large company haven’t happened yet, but are expected at any time while the industry takes a close look at its internal health.

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