Bank Profits Hit A Five-Year High Amid Huge Layoffs, Pay Cuts

Wall Street just scrimped, saved and cut its way back to pre-recession levels of profit.

Bank profits jumped to a five-year high in 2011, according to a new report from the Federal Deposit Insurance Corporation. But many who started the year happy Wall Street employees aren't feeling the benefits. As of November, Wall Street firms had laid off more than 200,000 workers, according to Bloomberg, -- at least 25,000 more than the number they laid off in 2009, during the depths of the recession.

To take one industry titan for example. Bank of America announced in September that it would be slashing 30,000 over the next few years in an effort to raise $5 billion per year. In the months after announcement, BofA employees subsequently started flooding rival banks with resumes, according to Reuters.

Wall Street as a whole is finding other ways to cut back. Many big banks cancelled or moved in-house their typically lavish holiday parties last year, The New York Times reported in December.

In addition, they've been slashing pay and bonuses. At Goldman Sachs, bonus day was reportedly a "bloodbath" as some employees found out they wouldn’t be taking home any bonuses at all. Morgan Stanley capped cash bonuses at $125,000 in 2011 and the company's executives received zero cash last year.

But Morgan Stanley's CEO James Gorman says employees shouldn't be complaining about pay and bonus cuts, even as the banks are taking home huge profits.

"If you're really unhappy, just leave. Life's too short," Gorman told Bloomberg TV in January of employees disgruntled by their latest pay checks.

And cutting employee pay isn't the only way banks are looking to maximize profits. Before officials ultimately scrapped it, BofA CEO Brian Moynihan defended his bank's $5 debit card fee in October, saying that the company "has a right to make a profit." Banking industry groups also came to BofA's defense, arguing that new financial reform rules meant that banks would have to start charging for once-free services in order to account for losses in revenue.

Comments

[Captain Hindsight]

07:58 AM on 03/01/2012

"company's executives received zero cash last year. "
Nice way to avoid paying taxes.

[spkninglsh]

05:54 AM on 03/01/2012

Credit Union!

[KarmaPatrol]

09:39 PM on 02/29/2012

The profit comes from the bailout, though with interest rates near zero (and a lot of real interest rates really at negative) imagine a number will be reemployed as loan officers and such. Here's your job back .... at half your previous pay ... with additional job duties.

[fortressfountain]

01:10 PM on 02/29/2012

I do not believe most banks are making a profit. Stocks for banks are voilitle and do not go up very high.
The money made was handouts from us-bailouts, tarps etc.
Even though they get 0% interest they want to pay low interest rates for savers but expect people to take out high interest credit cards with hidden fees and such, also high interest loans.
Now, how come they do not have to live like us? Lower interest rates to attract more borrowers. What a novel idea.
Wow, is this an example of goods and services created we cannot live without?
If I do not have money-or have a little money-I would rather keep it than allow the banks to take most of my little bit of money.

[Madge Miner Russell]

09:44 PM on 01/23/2013

7 More Banks Pay Back TARP Bailout Money (TAYC, ABCB, FDEF ...
247wallst.com/.../7-more-banks-pay-back-tarp-bailout-money-tayc-a... It doesn't make them any less despicable.

[pjohnh]

12:11 PM on 02/29/2012

This is that top talent kind of situation - where are these "bankers" going to go? They are purported to be so vastly intelligent and hardworking....how does that work when you are spending other people's money?

They should all easily be able to open their own companies on their own credit and collateral - create jobs, and make millions, right?

[olitenup]

11:46 AM on 02/29/2012

"Power corrupts. Absolute power corrupts absolutely." Lord Acton.

[Fredrick Dawkins]

08:59 AM on 02/29/2012

it is not lost revenue. Revenue means product/service for money they didn't provide either just started charging for using the card in a world where we MUST use the card for our daily activity to charge us a monthly fee for giving your company our business is business speak for "now that we have them using our product all the time lets charge them for the right to have our card". It is truly amazing how neo-conservatve you all are in your personal lives and how in business its all about being progressive freaking two faced republicans.

[jessjesskk]

03:18 AM on 02/29/2012

This is what we got by whining about bonuses. As everybody said, bonuses (and some of them in banking are clearly not justified, but some are) is a battle between Employees and Shareholders. Money paid in bonus is not more money for poor employees but more money for shareholders, i.e. it's money taken from the rich to b given to the extremely rich.

[twninja]

06:52 PM on 02/28/2012

sigh . . . they have the right to make a profit, but we don't have the right to not to bail them out.

[thecornerangel]

04:57 PM on 02/28/2012

Do you think that the aspiring 1% finally gets it? Have they seen that the 1% will never let them in without a war? Maybe the worker bees in those banks will start a Union.

[wanagiakicita]

05:08 PM on 02/28/2012

That would be sweet! I hope they do. Maybe then they'll see why unions are important to the Middle Class worker.....you didn't see any CEOs laid off.

[QuantProgrammer]

05:59 PM on 02/28/2012

That's not how the white-collar mentality works. If you are underpaid relative to the market, the correct response is to make like a tree and leave.

[thecornerangel]

12:07 AM on 02/29/2012

Right, maybe they'll get the only jobs available: lobbyists.