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Bank of America to slash thousands of jobs
Bank of America customers use an ATM.
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Jeremy Hobson: There are reports this morning that Bank of America will cut 3,500 jobs over the next few months. And the bank is working on restructuring plans that will ax several thousand more. We continue our special coverage now "Breakdown: Our Economy One Step At a Time" with our senior business correspondent Bob Moon who is here live. Bob, good morning.
Bob Moon: Good morning.
Hobson: So, why is Bank of America doing this?
Moon: Well I can answer that with a question: when's the last time you got a loan? Demand for new loans is down, and B of A is like many banks still carrying the burden of those bad home loans on their books, and it's making it tough to make money. That helps explain why Bank of America shares have lost almost half their value so far this year. And the quickest way to boost the bottom line and attract investors is laying off workers.
I spoke to Christopher Whalen this morning at Institutional Risk Analytics. He says the irony is B of A is in the wrong kind of growth business right now -- it's working through all those bad mortgages.
Christopher Whalen: They're still hiring in the back office, if you're talking about people who can work on foreclosed real estate, or deal with legal issues for all the litigation they're in. They're hiring.
And Whalen says that's not the way for a bank to make money, or stay solvent, for that matter. And Jeremy, in explaining the layoffs, BofA CEO Brian Moynihan reportedly sent a memo to senior executives saying the company owes it to customers and shareholders to stay competitive.
Hobson: Marketplace senior business correspondent Bob Moon. Thanks, Bob.
Moon: Thanks.
Why BofA has to cut jobs is beyond me. Having worked in the processing end of short sale negotiations, I can attest that they are by far the WORST in getting a short sale to close. Their submission process is cumbersome, with built in delays. And I have yet to know any home owner who has received a loan mod from them - they love having homes in foreclosure, which they pursue relentlessly while stringing people along with short sale negotiations and delaying loan mod apps. It is such a scam. And they get away with it.
It used to be the conventional wisdom that a short sale was better for the bank than a foreclosure. That does not seem to be the case with them. I have seen short sales denied because of those bogus drive by BPOS that they order for about $40 a pop, and call appraisals. Realtors used to be able to dispute cheap appraisals like this with knowledgable arguments and data from their local market, but no more. The pressure to foreclose is now relentless.
BOA (Bend Over America) could actually dump those probably foreign short sale and loan mod processors, and get real about not acquiring quite so many "toxic assets" (ie homes of people who want to pay their mortgage, they just need breathing space. Instead, they will likely dump tellers, cut banking hours, outsource their phone support even more than ever, and in general, do NOTHING for the depositors and borrowers other than just give tired excuses and continue to rob the American public with the wholesale approval and financial backing of the US government.
THEY DESERVE TO FAIL. THEY FAIL AMERICA EVERY DAY.
