With Recession Looming, Major Bank That Contributed to 2008 Crisis Announces Mass Layoffs
Goldman Sachs is looking at cuts that could trim its workforce by 8 percent, according to multiple reports.
A report by Fox Business said the full scope of the layoffs is uncertain, but with 49,100 employees as of Sept. 30, an 8 percent cut would mean somewhere around 4,000 employees could lose their jobs.
The firm cut 500 workers in September.
Further, the annual round of hefty bonuses could be reduced or eliminated for what the Wall Street Journal called underperforming employees.
A report in the New York Post, citing the Financial Times, said the bonus pool was going to be diminished by 40 percent.
As one of Wall Street’s major financial institutions, Goldman Sachs is a pivotal player in the regional and national economy. In 2016, Goldman Sachs agreed to pay $5.06 billion to make up for its role in the 2008 financial debacle that triggered a massive recession, according to the Guardian.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” Stuart Delerty, who at the time was an acting associate attorney general with the Department of Justice, in a statement.
The current problem at Goldman Sachs was triggered by growth that led to the addition of 11,000 jobs from the end of 2019 to September of 2022, according to the Journal.
The current economic climate, though, has cooled, leading to the need for cuts, the Journal reported.
Morgan Stanley, for example, cut about 2 percent of its workers worldwide, a cut of about 1,600 jobs.
“We went from boom to bust immediately, so in hindsight [banks] probably overhired,” Alan Johnson, managing director at Johnson Associates, a compensation consulting firm specializing in the financial services industry, said.
The coming year “isn’t looking great either,” Johnson said.
Goldman Sachs plans to cut as many as 4,000 jobs as it struggles to reach profitability targets, Semafor reports https://t.co/1HYAUVvcrr
— Bloomberg Markets (@markets) December 16, 2022
Wall Street recruiter Mike Karp said more cuts are likely.
“Many firms will have to go back to the drawing board and right-size their organizations, it’s not just Goldman. Firms over-hired, and now they will have to over-fire, too,” Karp, CEO of the Options Group, said, according to CNBC.
Goldman Sachs CEO David Solomon noted the need to retrench in a recent speech.
“We continue to see headwinds on our expense lines, particularly in the near term. We’ve set in motion certain expense mitigation plans, but it will take some time to realize the benefits. Ultimately, we will remain nimble and we will size the firm to reflect the opportunity set,” he said.
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