Financial industry getting axed big time

[Coronita]

It seems like financial institutions are dropping the ax pretty readily these days…Even from co’s that seem to be doing ok….

American Express just announced they are axing 4500 positions.

Morgan Stanley is axing 1600 or so..

Kinda brutal to be in the financial sector right now I guess.

[UCGal]

Wonder how much correlates to bonus season.
But I’m cynical.

[The-Shoveler]

You would think that IF the economy is improving, they would not be axing
Does anyone have a chart showing Financial firms layoff and the next direction of the economy/(or market),

Seems like they would be expecting a downturn if they are axing but then again I don’t know jack about that industry.

[EconProf]

Every branch of Chase that I go into seems to be overstaffed. Personnel always trying to upsell me on something…everybody saying “Hi” when I walk in and “Have a good day” upon leaving. And the tellers always begin with “Welcome to Chase, how can I help you today?”, and some time during the transaction, “How is your day going?” Wish they would chop the payroll and use the money to give us better interest rates.

[moneymaker]

Interest rates will go up but it won’t be the banks decision. I think there is a correlation between 30 year rates and people getting out of the bond market and back into securities. Right now conventional wisdom seems divided on wether it is going to be a good year for banks or not. I don’t know about this year but in my mind banks that carry mortgages are no different than the bond market, which I think more people are getting the idea to get out of.

[SK in CV]

[quote=moneymaker]Interest rates will go up but it won’t be the banks decision. I think there is a correlation between 30 year rates and people getting out of the bond market and back into securities. Right now conventional wisdom seems divided on wether it is going to be a good year for banks or not. I don’t know about this year but in my mind banks that carry mortgages are no different than the bond market, which I think more people are getting the idea to get out of.[/quote]

Banks don’t carry the mortgages. They make their fees and sell them.

[moneymaker]

The smart ones don’t carry, but I believe many still do carry the prime ones.

[bearishgurl]

[quote=moneymaker]The smart ones don’t carry, but I believe many still do carry the prime ones.[/quote]

Chase still has many thousands of CA-originated “portfolio” Alt-A and prime mortgages which they “inherited” from WAMU who “inherited” them from Great Western Bank (and originated some themselves). I have one and is/was a “prime” borrower. Ditto for Downey Savings and a few others, including independents and some credit unions.

These mortgages are mostly indexed to the COFI and here in CA, our branch of the FHLBB (in SF) is known as the “11th District,” hence, in CA they are tied to the “11th Dist Cost of Funds Index.”

There is no reason to pay them off or refi because they have been adjusting downward monthly all by themselves in the last eight years or so and the index has cratered in recent years, so much so that the index plus the margin in some cases is less than the “floor payment” of 2.45% to to 2.75% (equal to the “margin”).

All were 30-yr mortgages and all the while they were/are fully amortizing.

Smart borrowers of these mtgs NEVER made less than the fully-amortized payment when they had the option to do so (the first 60 months of the loan). Hence, they have no deferred interest to pay and their payments never fluctuated very much.

In addition, they are “assumable” for a small fee to a qualified borrower.

It is unfortunate that programs exactly like I describe here do not exist anymore. There are variations of them available today but have backstops built into their annual caps (such as annually-adjusted level payments which cannot fluctuate up or down more than 7.5% in either direction when the loan is recast … every 12 mos). I suspect this was later added to “protect” stupid borrowers from themselves but the provision has been to the lender’s benefit, because a borrower on this program obviously has not been able to take advantage of the very lowest rates in recent years.

I think mortgage lending decisions should be made locally, by local lending institutions, with local loan officers and local appraisers employed by them and the mortgages kept in-house. This practice would have eliminated all the shenanigans which occurred during the “bubble years,” namely because they would have been loaning their own money and also servicing the loan.

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