The TRUE Cost of Corporate Greed

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corporate greedThe news of layoffs seems to be the new “normal” in financial industry.  As banks stray out of traditional areas and it’s the rank and file who seem to take the hit, the cost of a return to normalcy is incredibly high. The True cost of corporate greed is being shown.

UBS has agreed to pay about $1.5 billion to settle a portion of the claims against it for securities trading violations. And now there are 10,000 layoffs looming as part of the split of its investment banking from the traditional banking arm.

Barclays was fined over $460 million for its part in the Labor rate manipulation case; it has been hit with about $1.2 billion in fines and penalties since 2009.  Now, it plans to lay off about 10 percent of its investment banking employees.

HSBC and Bank of America have each announced planned layoffs of about 30,000 employees in 2013. HSBC recently agreed to a $1.92 billion settlement with U.S. regulators, and there are likely more settlements to come. Bank of America’s lending business is tepid at best.

So, what is the cost to the rank and file at just these four institutions?

If the average employee earns $40,000 per year (probably a very low estimate) and 72,300 of them have recently been or about to be laid off, the annual loss of income is about $2,892,000,000—about the same order of magnitude as the fines and penalties to date. So, who is really paying the price for the greed of a few top level staff and so-called rogue traders?

The nearly $3.0 billion in lost wages is only the tip of the iceberg, though. The multiplier effect of injecting that amount of money into the world economies is the real loss. This is money that won’t be spent; jobs that won’t be created, buildings that won’t be needed, and mortgages that can’t be obtained.

So, who pays? Really?

Anna Timone (195 Posts)


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