All Articles Tagged "financial crisis"
The financial wreckage from 2008 is still taking its toll on the economy. The largest bank in the US by assets, JPMorgan Chase, announced that it will be reducing its workforce by 4,000 this year and that ultimately the company plans to eliminate 17,000 jobs. The remaining 13,000 eliminations will occur in 2014. Proving that even the biggest of the big boys can’t provide protection from the unemployment line.
For 2012, JPMorgan reported net income of $21.3 billion up 12 percent from last year while revenue was flat at $99.9 billion and expenses moved up by three percent. The reductions were announced by Jamie Dimon during an investor day presentation in Manhattan.
During the downturn many of the larger banks acquired failing banks looking for refuge and JPMorgan is just now trimming the fat. The majority of the reductions will come from the company’s mortgage business, including those that deal with defaults and home lending since volume has declined. However, Kevin Watters, the head of the bank’s mortgage operations, stated that mortgages will remain a core product and the bank plan to increase its market share.
They will also take an axe to the staff of older retail branches. As many consumers move to mobile on online banking these branches are getting less traffic. However, at the same time Chase plans to open more than 200 new locations in 2013 and 2014.
JPMorgan chase is the most profitable of the US banks and cutting expenses will lead to even more profits. I would not be surprised if other fatter banks like Bank of America or Wells Fargo, which have already made significant overhead reductions, chose to cut even further to stay competitive.
As mentioned JPMorgan is first by assets, but only third by number of locations and will have the least number of employees compared to its counterparts including Bank of America, Citigroup and Wells Fargo. This move could make Chase leaner and seal its spot as number one for years to come.
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Whether a job cut is expected or unexpected, it can be a harsh blow. Rent is due on the 1st, the car insurance in due on the 2nd, and possibly baby number three is due in a couple of months. When the unexpected happens and your financial lifestyle is threatened, it could be unnerving, leaving you feeling powerless and and fearful for the not-so-distant future.
Don’t feel trapped by the binds of finances and money. Prepare better for unexpected financial situations that could put you in a bind, like unemployment, children or a sudden rent increase with a few of these money-tightening techniques.
(New York Times) — When an arbitrator ruled this month that Detroit could reduce the pensions being earned by its police sergeants and lieutenants, it put the struggling city at the forefront of a growing national debate over whether the pensions of current public workers can or should be reduced. Conventional wisdom and the laws and constitutions of many states have long held that the pensions being earned by current government workers are untouchable. But as the fiscal crisis has lingered, officials in strapped states from California to Illinois have begun to take a second look, to see whether there might be loopholes allowing them to cut the pension benefits of current employees. Now the move in Detroit — made possible, lawyers said, because Michigan’s constitutional protections are weaker — could spur other places to try to follow suit. “These things do tend to be herd-oriented,” said Sylvester J. Schieber, an economist and consultant who studies pensions. The mayors of some hard-hit cities have said that the high costs of pensions have forced them to lay off workers: Oakland, Calif., laid off one-tenth of its police force last year after failing to win concessions on pension costs.
(Bankrate) — The billionaires making big-dollar deals in the steel and glass spires of Wall Street may seem far removed from your average American, but they do have one thing in common. Both sometimes make boneheaded financial mistakes. Yes, these investors may have graduated from Ivy League schools and have been receiving bonuses that dwarf the lifetime earnings of many Americans. But the recent report from the Financial Crisis Inquiry Commission shows many captains of the financial industry making some of the same money mistakes that American consumers make every day. Here’s a breakdown of some of the everyday financial mistakes the titans of American finance made that helped wreck the U.S. economy, and how you can avoid your own personal finance crisis in the future.
Don’t invest in what you don’t understand: In the years before the financial crisis, many big-time financial institutions invested heavily in collateralized debt obligations, pools of sliced-up mortgages of varying quality known as CDOs. When the mortgage market tanked, CDO values collapsed, sending Wall Street firms such as Merrill Lynch into a financial tailspin. In retrospect, it’s clear the firms didn’t fully understand the complex CDOs’ inherent risks. Unfortunately, individual investors who invest in securities they don’t understand also can find themselves ambushed by big declines in their investments, says Kent Grealish, a registered investment adviser and co-owner of Quacera Capital Management in San Bruno, Calif.
(New York Times) — The American International Group said Thursday that it had completed a plan to repay United States taxpayers for bailing out the insurance giant during the height of the financial crisis.Under the plan,the Federal Reserve Bank of New York would be repaid the nearly $20 billion that it is owed and theTreasury Department would convert the $49.1 billion in preferred stock that it holds into 1.66 billion common shares. Over all, A.I.G. received a bailout package of nearly $180 billion.
(TheNation.com) — Derivatives, derivatives, derivatives! Throughout the financial crisis, the word derivatives has popped up in every corner, every hearing, every news broadcast related to the crash. Yet, they remain one aspect of the crisis shrouded in mystery; they are under-explained, difficult to comprehend and maligned by many. This week, the Senate defeated an amendment to the financial regulation package that would have weakened its controversial, but crucial derivatives language.
(CNNMoney.com) — As the real estate market came crashing down, widespread packaging of toxic mortgages into complex financial products, blessed by credit rating agencies, caused the crisis to spread to the larger economy. That’s the subject of an 18-month investigation by the Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin, examining the causes of the financial crisis.
(CNBC.com) – A panel investigating the roots of the financial crisis will press current and former executives of Citigroup at hearings this week about the bank’s role in spreading trillions of dollars in risky mortgage debt through the banking system.
The hearings are the first by the Financial Crisis Inquiry Commission to focus on a single company. Witnesses include former Citi CEO Chuck Prince and former Chairman Robert Rubin, who was Treasury secretary during the Clinton administration.
(Bloomberg) — Wealth managers will have to work harder for business this year now that the financial crisis has stabilized, said Robert Gould, head of investment and wealth management for Brown Brothers Harriman & Co.
“That means 2010 becomes a more competitive environment for the wealth management business,” said Gould in an interview at Bloomberg headquarters in New York yesterday. Gould oversees about $40 billion for the New York-based firm, whose clients have at least $5 million in investable assets, he said.”