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Banking and Finance

Wall Street Journal: Bank of America Cuts are “Dodd-Frank Layoffs”

by Troutman Sanders CFPB Team

September 13, 2011. Bank of America announced on September 12, 2011 that it plans to cut up to 30,000 jobs over the next two years. While Bank of America was not overly direct in stating the reasons for the cuts, today's Wall Street Journal's Opinion page did not equivocate, saying "these layoffs are part of the bill for the last two years of Washington's financial rule-writing." Accusing Democrats of enacting a "myriad new rules that had nothing to do with easy money or housing" the WSJ pointed to a loss of $475 million in debit card revenue as just one area where new regulations have slashed at banks' profitability.

As the article makes clear, while efforts to restrict the profitability of big banks "may have obvious populist appeal," there should be very little surprise when a bank decides to cut operations, eliminating employees and jobs, in those areas that are no longer profitable due to regulations. "Add in the various federal programs aimed at extracting penalties for this or that mortgage-foreclosure error and it's understandable that a bank would have trouble forecasting growth to justify its current work force."

While the writer acknowledges that Bank of America also is suffering from a number of self-inflicted wounds he also calls out elected officials saying that, with the clear effects on banking employees, "politicians should not be allowed to pretend that there are no consequences when they deliberately reduce the profitability of employers."

Read more at Consumer Financial Protection Bureau Report by Troutman Sanders LLP. 

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