Why fire people that have a net cost of about 150K inclusive of bonus, salary, FICA/FUTA/SUTA/401K...

you're wrong... keeping around a little low paying 'fat' is in the bank's interest.

that is sweet... 30k to start later. that is just sweet.

to the original poster: Analysts have already been laid off at some places. JPM LevFin for one. GS moved a bunch of S&T 1st year analysts to operations, which isn't quite the same as being laid off, but unless GS gives them the chance to move back into S&T then from a career perspective that's about as bad as being laid off.

I work at one of the banks mentioned and there have been no analyst layoffs yet, but talk is strong that there will be. Nobody really knows what will happen with analysts - there are reliable rumors that X percent of certain divisions will be cut, but it's unclear how the breakdown between analysts/associates/vps/etc will be. Also, while it makes sense that analysts might be less likely to be cut since they are the cheapest...it also makes sense that analysts are least "crucial" to the group since they have the least knowledge, experience, etc. This may not be tru in traditional IBD where they need masses of people to do grunt work, but I work in capital markets where the group layouts are a bit more flat.

PublicEquity1,

Only cute ones are DB and JW (since left). Even without extending FT offers to those outside the SA class, it will be a record year due to the high retention rate. As I know they are still conducting campus recruiting next year WILL be a record size class. In IBD no group has cut back its banking staff, except possibly sponsors/LevFin.
I did not mean to insinuate that BoA is in any real trouble, however, they are scaling back their IB presence by choice. While J.P has done well with the model of being a "one stop shop" for financing, they have done so because they are backed by a strong IBD core (although much of their banking is concentrated in FIG). Citi and BoA have stumbled with this model since overall their banking divisions are not as strong (especially BoA). Any severe softening in the levfin market will lead to a major decrease in the IB advisory work. What people don't seem to understand is that these three banks were gaining advisory work by commiting to fund these deals (think BCE, TXU, Freescale) not because they had brighters banker. The majority of these bridge loans are still on their books, and at some level will constrain their lending abilities. I am actually suprised that CLOs created by these leveraged loans have not come under the same scrutiny as CMOs backed by mortgages. Anyone have any ideas about this? I was even more suprised to hear that Buffet bought $2 B of TXU bonds, but I guess they were discounted and safer since its a utility.

As I mentioned above I think that subprime will be a major writedown issue well into Q1 2008, so many of the banks so far "unscathed" may still have problems. I am personally concerned about who the counterparties (and their financial strength) of GS, MS, and LB's hedges. Someone has to be suffering. However more importantly, I think leveraged loans will suffer from the next subprime-like investor phobia. I haven't checked the ABX index recently, but does anyone know where it has ranged since August?

"I heard that a BB randomly laid off some of their 1st yr bankers in their restructuring process. Can you imagine what a career bummer that is? where are they gonna go now that the market is so bad?"

Do you honestly believe any bank would "randomly" let people go?

Correct me if I'm wrong, but I believe PoshMonkey means to say 1st years were laid off as a part of an internal restructuring process.

You are obviously not in the wall street state of mind nystateofmind.

Citi is laying about 45,000 employees, UBS 1500, BOA 3000... what do you think their strategies are in laying people? Performance for the more seasoned. What about the first year analyst that haven't given the chance to perform? If not randomly, then what? Work ethics? HA!

We're going to see a sizable number of workforce reductions at all levels, starting in January. I know, because I've helped parse through the lists. Yes, analysts will be included. While you get more bang by axing more senior bankers, who can cost the same as a dozen or more analysts each, make no mistake that the market conditions are deteriorating rapidly.

Some banks will cut more deeply than others. Some will be reluctant to act too quickly. However, even the most optimistic firms (I believe) would agree that at this point our headcounts exceed the market opportunity. Hence, we will begin re-sizing our rosters to more closely approximate the new revenue outlook. Anything more optimistic than that is wishful thinking.

so are ft people starting this june in danger?

Oh shit, I'm on an H1B...if I lose my job I'm going to get deported to Canada...Fuck!!!!! I don't wanna go back to Canada...

Firing generally refers to an individual being let go "for cause" - meaning that termination was for something specifically done by an individual.

Broader groups being let go is more a reflection of company or industry-wide impacts, so the lighter term of layoff is used.

I like Canada as a country, but the job opps in finance in Toronto suck compared to New York. That's the problem with being international...if I lose my job its game over and back to Canada. ..I guess I'll go back to my old HS job of managing my local ice hockey rink...yay

I did indeed live through those days, and it was an incredibly painful and traumatic time. You have to understand, I went through seven (!) rounds of cuts. The worst two took out about a third of our remaining headcounts each. At that point, you're well past cutting fat, or even muscle. At that point, the knife is going to the bone, and it hurts. Even those of us who made it would be wandering around the halls like zombies. You're like shell-shocked survivors after a neutron bomb strike - the building is still there but the people are all gone.

It was awful for the people who found themselves jobless, in an economy where their chances of continuing in their chosen profession were effectively zero. What you perhaps don't realize was that it was equally bad for those of us who made it. Morale was in the tank. You didn't know when the next round was coming, and so many people (both good and bad) had been axed that you really began to understand that you might well be next. Fairness and merit play a key role, but at the end of the day it's never a perfect process.

What's my point in regaling you with stories of the dark days of 01/02/03? Well, it's to say that it's not that bad... yet. It feels to me like mid-2001. We'd had some minor performance cuts early in the year, and mid-summer we had our first real workforce reduction, a 10% job that opened eyes but didn't really put the fear of God into us. It wasn't until after 9-11 that we took the first body blow. A 25-30% cut came to a lot of firms in November/December, and that was an eye opener. A real "holy shit" deal. I don't feel like we're there yet.

We may well get there by April. I hope not. We're sort of on the edge of the knife, at this point, and it could go either way. I'm hoping that it's more short lived, like '98. Six months later and we were back off to the races. But that was a more specific, contained set of events, between Russia, LTCM and some devaluations. The issues we've got today are more systemic, and I'm afraid that they'll take a lot longer to work through. We'll see.

It depends. For those who took a bullet very early (up to mid-'01) or very late (mid '03), many found new jobs with other firms who were more aggressive about the opportunity. Those caught in the middle, for the most part, exited the business and either never came back, or at best found their way to very small boutiques.

The problem with sitting on the sidelines is that your contacts atrophy and your information flow becomes stale. You are out of the stream of conversations, and you get out of date fast. Meanwhile, new classes of bankers are moving up the ladder. By the time the market turns, it's hard to find your way back to the business.

new 1st years are relatively safer, since we have not really had a formal review yet?

Genghis, Thanks for your comparison with recent history. Very insightful.