Bank of America Cuts Workers
Another Growing Trend
The Banking conglomerate is cutting approximately “30,000 jobs” over the next few years. It is estimated that this will save them billions of dollars, according to a report in the Associated Press. CEO, Brian Moynihan stated that the bank has made some significant changes over the past two years. According to the report, the Bank of America has new goals and is setting a new direction for the company – it wants to become a smaller (and possibly more manageable) bank. The bank has already “eliminated 6,000 jobs,” before the announcement, according to the report.
New Executive Team
There has certainly been a change on who is running the show at the Bank of America, as top executives have left the bank, leaving their duties to the “Commercial Banking Chief” and “Investment Banking Head,” according to the article. They will both be answering to the CEO in their new positions. There has been no official word on the exact reasons why the former executives are leaving.
Stocks Going Up
As a seemingly direct result of this restructuring, Bank of America stocks have gone up a bit on Monday.
Why The Change?
There is a lot of speculation – of course the first thing that may come to mind is all of the trouble the bank has had to face recently. According to further reports (AP), the bank has lost “value” over the past few months due to the eventual fall out of “poorly written mortgages,” it purchased. This is a direct result of the bank’s acquisition of mortgages from Countrywide Financial Corp., three years ago, according to the report. They also purchased Merrill Lynch a year after the Countrywide purchases. This was during the big bursting of the housing bubble, as I am sure you can recall. This set a downward spiral into place for the bank. Now, all three lenders are being sued by, “investors and regulators,” as a result of the failing value of those mortgages (acquired), according to the report.
Further reports note that the Bank of America has the highest amount owed, out of the other 16 banks currently being sued for “mortgage-backed security sales,” at over $55 billion dollars. The bank has paid back a little more than $12 billion so far according to those same reports. Experts believe that settlements may be offered very soon with regulators; however, no mention of the same with “investors,” according to the reports.
What This Means to You
If you are an investor, it seems that you are already in line, or will have to get into line for your remedy. Customers or other consumers may expect the usual occurrence when large companies diminish staff: customer care failings, possible fee hikes, service changes, or longer waiting periods for proper service overall. Of course this is only speculation right now. On the other hand, things may improve after the transitional period is over. That is a very real possibility as well.
There are currently no reports of any of the other banks being scrutinized, cutting large amounts of staff or restructuring their line of executives or other departments.
Resources:
Associated Press: http://www.ap.org
Yahoo! News: http://www.news.yahoo.com