Bank of America's 30000 Job Cuts Biggest in U.S. This Year

Bank of America is delivering the U.S. its biggest job-cut blow of the year as the nation is battling unemployment woes.

The bank will eliminate about 30,000 jobs in an effort to restore investor confidence and turn a negative tide that has swelled after the recession and amid the slow-growth economy.

A Bank of America shareholder walks into the corporate headquarters prior to the start of the Bank of America annual shareholders meeting in Charlotte, North Carolina May 11, 2011. The company will slash as many as 30,000 jobs as part of a cost-savings plan announced Monday.


A Bank of America shareholder walks into the corporate headquarters prior to the start of the Bank of America annual shareholders meeting in Charlotte, North Carolina May 11, 2011. The company will slash as many as 30,000 jobs as part of a cost-savings plan announced Monday.
The jobs cut is the single largest job reduction by a U.S. company this year, and the most since the U.S. Postal Service said last year it wanted to cut an additional 30,000 jobs. Earlier this year Merck & Co. said it would cut 13,000 jobs, and Bank of America's is the largest since General Motors cut 47,000 jobs in 2009.
Bank of America is trying to cut costs as its Countrywide mortgage unit continues to suffer massive losses.
The cuts fall in line with massive job reductions at financial companies in the U.S. and abroad. However, as already this year the 50 largest global banks had announced nearly 60,000 job cuts, the fastest pace since the recession-plagued year of 2008. As the economy in the U.S. and Western Europe stagnates, banks have had to reduce costs to become or remain profitable.
Bank of America said the elimination of 30,000 jobs will help the company cut $5 billion annually in expenses by 2014.
"As the company implements the thousands of decisions from Project New BAC over time," BofA said in a statement, "it intends to become a more focused, leaner, and more efficient company, providing all of its customers and clients with the best financial services, generating strong revenues, carefully managing expenses and risks and delivering long-term value for shareholders."
The company already announced job cuts of 6,000 earlier this year, but the latest move is a significant downsizing effort for the bank, which employed 288,000 workers as of June 30. The company's shares have been clobbered this year amid struggles from its mortgage units and concerns over the need to raise more capital in the global economic turmoil, shedding 47 percent in 2011.
On Monday, Bank of America's shares traded up seven cents on news of the job cuts, to $7.05. The 52-week low for Bank of America  is $6.01, but the company's shares have plummeted this year, down from a yearly high of $15.31.
The downsizing is part of the bank's first phase of a cost-cutting program -- "Project New BAC" -- that the company hopes will ultimately result in the full $5 billion in annual savings. The company issued a statement on the "new BAC" job cuts plan Monday at the Barclays Capital 2011 Global Financial Services Conference in New York.
"It's time to simplify the organization, streamline the organization and make sure our business processes are relevant when you have a smaller, more focused company. We just don't need to be the biggest," Bank of America CEO Brian Moynihan said in a Sept. 6 interview.
Bank of America said its goal isn't a "given number" of job cuts, but rather implementation of the New BAC decisions. The company said as those decisions are made, employment levels in certain areas under review are expected to be reduced.
Bank of America acquired Countrywide at the time the federal government was involved in TARP bailouts of many financial companies.
Among recent moves by Bank of America was taking a $5 billion investment from investor Warren Buffett, selling half of the company's China Construction Bank investment for $8.3 billion, and ousting consumer bank head Sallie Krawcheck.
In a meeting in New York on Monday with analysts, Moynihan also didn't close the door on other drastic moves, including a bankruptcy filing for Countrywide, which has cost Bank of America tens of billions in losses. When asked if he would consider putting Countrywide into bankruptcy Moynihan replied, "We look at all our options."

US:Record poverty last year as household income dips

Median household income declines; families ‘doubled up’

 

By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — A record number of people were in poverty last year as households saw their income decrease, according to data from the Census Bureau Tuesday, demonstrating the weakness of the economy even after the official end of the recession.

The 46.2 million people in poverty in 2010 was the most for the 52 years that estimates have been published, and the number of people in poverty rose for the fourth consecutive year as the poverty rate climbed to 15.1% — the highest since 1993 — up from 14.3% in 2009.

Meanwhile, real median household income in 2010 was $49,445, down 2.3% from the prior year and below pre-recession levels.

“I would frame this report as giving us a look at whether the so-called recovery that started in June 2009 has had any widespread benefits for American families,” said Larry Katz, a labor economist at Harvard University.

Economists say the recession officially ended in 2009, but employment remained weak in 2010, with a national employment gain of only about 940,000 jobs — less than half the growth in the civilian population that’s outside prisons and the military. Also, the unemployment rate remained elevated, declining to 9.4% by the end of 2010 from a peak of 10.1% in 2009.

While the data released Tuesday paint a grim picture, the results could have been even worse without government benefits such as extended unemployment insurance that were “pretty good at plugging some holes in the safety net and preventing even more people from falling into poverty,” said Harry Holzer, a public-policy professor at Georgetown University.

Still, times are likely to be tough for a while, according to Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.

“Looking ahead, poverty seems unlikely to improve because of the way the economy is going,” he said. “State and local governments are retrenching, cutting spending, which will slow economic growth.”

The Census report also noted a gain in “doubled-up households” — those formed by combining households with other families or individuals to deal with the tough economic times. This year, about 5.9 million adults between 25 and 34 live in their parents’ households, up 25% from 4.7 million before the recession. Between spring 2007 and spring 2011, the number of doubled-up households rose 2 million to 21.8 million.

The data on poverty come as Congress debates a jobs package President Barack Obama introduced last week that includes payroll-tax reductions, and as Republican presidential candidates and congressional lawmakers debate the best way forward for the economy.

Details

For 2010, the poverty threshold for a four-person family, including two kids, was about $22,000. The official definition of poverty excludes certain benefits, such as food stamps and housing assistance.

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Recession + default = recovery

MarketWatch’s Brett Arends says one way for the United States trigger a recovery is to default and declare bankruptcy. (Joe Raedle/Getty Images)

Private insurance covered about 64% of people in 2010, down from about 64.5% in the prior year, with such coverage trending down since 2001. Those covered by employment-based insurance ticked down to 169.3 million from 170.8 million. Those covered by government insurance rose to 31% from 30.6%. In 2010, about 9.8% of children under 18 were not insured.

Real median income for family households fell 1.2% to $61,544 in 2010, while nonfamily households’ income dropped 3.9% to $29,730. By region, income in 2010 fell about 2.9% in the West, 2.5% in the Midwest, 1.9% in the South and 1.2% in the Northeast. By race, income fell 3.2% for black households and 1.7% for whites.

By sex, real median income fell 0.4% in 2010 for men who are full-time workers, compared with a gain of 0.1% for women. In 2010, women made about $36,931 — 77% of $47,715 for men.

Among children under 18, the poverty rate reached 22% in 2010, compared with 13.7% among those 18 to 64. In 2009, the poverty rate among kids was 20.7%, compared with 12.9% among those 18 to 64.

By race, the poverty rate among blacks was 27.4% in 2010, compared with 26.6% among Hispanics, 13% among whites and 12.1% among Asians. By region, the poverty rate was 16.9% in the South, 15.3% in the West, 13.9% in the Midwest and 12.8% in the Northeast.