Bank of America is back in the news. This time, they’re thinking of making a major contribution to the nation’s unemployment numbers with a restructuring plan that could eliminate as many as 40,000 jobs in the first phase alone[1]. In August, BofA CEO Brian Moynihan warned of coming cuts, but predicted less than a tenth of this new projection. Moynihan emphasized that while the reductions in staff were unpleasant, “we owe it to our customers and shareholders to remain competitive, efficient and manage our expenses carefully.”
The new cuts will take place over the next three years, and BofA wasted no time in starting the process at the top by removing top managers Sallie Krawcheck, who managed the banks investment and wealth management units, and Joe Price, president of global consumer and small business banking[2]. Bank of America hopes that the restructuring could help it get back in the black after dealing with lawsuits, billions of dollars of bad mortgage debts and horrible press from every side following its involvement in last fall’s robo-signing debacle and its 2008 acquisition of Countrywide.
Although analysts predict that the layoffs could potentially affect customer service because there may be fewer people to handle that issue, on the whole they predict that the bank will “pull out all stops to keep…business”[3]. This could include slashing mortgage rates, extending existing credit lines or lowering interest rates on credit cards. Do you think it is possible that BofA could fail?
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[1] http://www.bankinvestmentconsultant.com/news/bank-of-america-massive-restructive-program-2675021-1.html?ET=bankic:e3864:2148529a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=BIC_Daily__090911
[2] http://www.ibtimes.com/articles/211350/20110909/bank-of-america-layoffs-global-hsbc-job-losses.htm
[3] http://sanfrancisco.ibtimes.com/articles/211586/20110910/what-the-bank-of-america-shake-up-means-for-you.htm
Sure they can fail. At least they are being a bit pro active.
Looks to me that they are getting the idea in terms of the rate cuts etc. Times are tough therefore demand is off. Create demand via price cuts is a good move. Lower margin but if you increase the volume it will work out. The other option is wait it out and take a nice painfull slow death.
Bryan – As I’m sure you are aware, B of A is not a lender! All “loan” packages are owned by other identities (Investors). B of A simply ‘Services’ those “loans” for a fee, as do all of the banks. They (the banks) have no money at risk in their so called “loan” packages. That’s the primary reason they have no interest in finding a real solution to the ‘housing crisis’. The higher the “loan” value, the higher the fee! The longer the “loan” is in place, the more the bank makes! Very simple! It’s amazing to me that leaders like yourself don’t broadcast this information to us commmon folk.
The above being said – I enjoy your letter and the format in which you make your presentation. Excellent!
They won’t fail while the Bozo-in-chief is in charge, but after 2012 there’s probably a reasonable likelihood that B of A and others will fail, as states’ Attorneys General are becoming more resistant to negotiated settlements with B of A and other banks that would insulate the banks against individual lawsuits and provide GET OUT OF JAIL FREE cards for those in the banks who bear responsibility for this debacle.
The American people ABSOLUTELY WILL NOT STAND for additional bank bailouts after the shabby treatment in loans mods and refis they got from the banks already, who we bailed out with our tax dollars. “Fool me once, shame on you; fool me twice ….” ain’t gonna happen in this lifetime.
B of A FAIL ?!? No! They will not fail…in continuing to be the nations leader in providing terrible customer service. Terrible. The only people they treat WORSE than their customers are their own employees. Trust me, I worked there for 5 years.
So, after dealing with “horrible press from every side following its involvement in last fall’s robo-signing debacle and its 2008 acquisition of Countrywide”, B of A decides to elicit even more “horrible press” by exacerbating the already intolerable levels of unemployment.