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Bank of America has made it official: They plan to lay off 30,000 employees to bolster their bottom line and keep stock prices high.
Via Wall Street Journal:
We knew the Bank of America ax was going to fall, but we didn’t quite know the number. Today — after BofA CEO Brian Moynihan made no direct mention of job cuts during an investor presentation — the bank said it will cut about 30,000 jobs over the next few years.
The job cuts are part of the first phase of a sweeping Bank of America efficiency drive. BofA said in a statement that attrition and leaving vacant jobs unfilled with be a “significant part” of the expected headcount cuts.
That's a whole lot of attrition. As Laura Clawson over at Daily Kos points out:
Dealbook offers some insight into the lack of detail about 30,000 jobs and the emphasis on stock prices: Bank of America just isn't talking about it. When the bank's CEO described cost-cutting measures, he didn't even mention job cuts; that came later, in a statement that offered no specifics. Because to the big banks, jobs just aren't important. And financial reporters overwhelmingly go along with that.
While I agree with that analysis, there's something else people aren't talking about here that jumped out at me from this Reuter's article:
The Moynihan speech "was pretty underwhelming. They need to address the bigger issues the bank faces," said Jason Ware, equity analyst at Salt Lake City-based Albion Financial Group.
Ware is exactly right. The whole "job cuts and attrition" thing is BofA's way of putting employees on the firing line for continuing mismanagement of their mortgage division. Reuter's again:
Yet it also has one big, fat albatross on its balance sheets: Countrywide Financial. Bank of America acquired Countrywide for $4 billion, a deal that has proven a huge headache not just in dollars and cents, but in terms of the bank's reputation. "Basically all the mortgages that Countrywide produced from 2004 to 2007 were excrement," Geracioti says. "The question is: What are Bank of America's liabilities from Countrywide? Some say $100 billion, others say, 'Who knows?' The liabilities could be ginormous. The government is hassling the bank in a big way."
Bank of America has long held that Countrywide's problems were it own doing. But on September 2, the Federal Housing Finance Agency sued 17 firms - including Bank of America and Countrywide - for violations of federal securities laws in the sale of mortgage-backed securities. In an 88-page filing, the FHFA alleges that around 2005, top executives of Countrywide - which it labels as a "notorious mortgage lender" for its practice - "complained to each other at the time that BOA's appetite for risky products was greater than that of Countywide."
You just have to love how these executives blame the government "hassling" Bank of America for their woes. Never mind that it's totally justifiable in light of how desperately they needed to be bailed out when it all came to light. Bank of America has a systemic problem that it's desperately trying to cover up: It holds billions in toxic mortgages. Those mortgages are probably legally invalid due to the sloppy paperwork/signature issues on many of them, and represent a large chunk of the mortgage scam that landed us in this mess to begin with.
The only good thing to come out of this news is the shiny-bright message that corporate tax breaks do NOT create jobs. BofA paid no corporate income taxes in 2009 or 2010, they received a tax refund of nearly $1 billion in 2010. See how that works? No taxes and a big tax refund equals 30,000 lost jobs.
Where is the money going? Well, let's see. In 2011 alone, $1,570,000 has been paid to lobbyists. How many jobs would that money have saved or created? They paid big cash bonuses to executives, too -- $900,000 in all, though they did manage to tie payment to stock prices, which have plummeted this year. In 2010, they spread around $1.3 million in campaign contributions, and those are just the ones we know about. How many jobs might that cash have preserved?
It's really difficult for me to weep big tears over BofA's mortgage troubles, when they were of their own making and when they drove the engine that drove the crisis. If they're looking to cut costs, they ought to start by dropping executive pay to zero and resolving not to spend even one thin dime lobbying Congress or contributing to candidates. It would be a good start.