May 19, 2022

JPMorgan to Trim 4,000 Jobs

NEW YORK (AP) — JPMorgan will trim about 19,000 jobs over the next two years but cast a positive spin on the news: It is shrinking the unit it had beefed up to handle troubled mortgages.

The bulk of the cuts, about 15,000, will come at the mortgage unit, which had swelled to about 50,000 workers from a pre-financial crisis roster of 20,000 because the bank needed more people to process defaulted mortgages. The bank said it hopes to find jobs in other parts of the company for displaced workers through a “redeployment” program.

The rest of the cuts, about 4,000, will come from the consumer banking business, mostly the branches. JPMorgan said those cuts will come through attrition, not lay-offs.

The bank noted that it’s also adding jobs in certain areas, such as commercial banking and asset management. Overall, it expects its payroll to be down by about 17,000 at the end of 2014. That means it would fall to about 242,000 from its current 259,000, a 6.5 percent reduction.

The cuts were revealed in a presentation to investors Tuesday and are part of the bank’s bigger cost-cutting campaign. JPMorgan increased its profits and revenue in 2012 and has weathered the financial crisis and its aftermath better than most.

But like its peers, it’s facing a host of challenges. Banks are navigating new government regulations that have crimped some old sources of revenue, like issuing credit cards to students. The banks have also said that complying with the new regulations is costing them more money.

The move could signal a new direction for staffing: JPMorgan already shed about 1,200 jobs in 2012, after adding jobs in 2011 and 2010.

Bank of America, Citigroup, Morgan Stanley and Goldman Sachs all trimmed jobs in 2012. Morgan Stanley’s current round of job cuts has focused on senior ranks and investment bankers. Bank of America has also said it needs fewer people to work through problem mortgages, though it has cut jobs in other areas. Citigroup is scaling back in countries that it no longer sees as growth engines.

Shares of New York-based JPMorgan Chase Co. ended Tuesday down 10 cents at $47.60. The stock has gained about 24 percent in the past year.

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How 5 Older Workers Saw a Chance to Remake Their Careers

Too young to retire, too old to start over. Or at least that’s the line. Comfortable jobs with comfortable salaries are scarce, after all. Almost overnight, skills honed over a lifetime seem tired, passé. Twenty- and thirty-somethings will gladly do the work you used to do, and probably for less money. Yes, businesses are hiring again, but not nearly fast enough. Many people are so disheartened that they’ve simply stopped looking for work.

For millions of Americans over 50, this isn’t a bad dream — it’s grim reality. The recession and its aftermath have hit older workers especially hard. People 55 to 64 — an age range when many start to dream of kicking back — are having a particularly hard time finding new jobs. For a vast majority of this cohort, being thrown out of work means months of fruitless searching and soul-crushing rejection.

To which many experts say, “What did you expect?”

Everyone, whatever age, needs a Plan B. And maybe a Plan C and a Plan D. Who doesn’t know that loyalty and hard work go only so far these days?

“Shame on you if you’re not thinking every single year, ‘What’s my next step?’ ” says Pamela Mitchell, a career coach and author. “It’s magical thinking not to do this.”

Ms. Mitchell, who has reinvented her own career a few times, says everyone should think about options, alternative job paths and career goals, just in case. She recommends talking over job possibilities with family members and, if possible, building a financial cushion.

Constant networking is crucial, too. The idea, she says, is to prepare in case a big change comes.

“If you’re thinking about it, you’ll be doing all this piecemeal along the way,” she says.

All of which, of course, is easier said than done. But some people who have gone through the emotional and financial strains of late-career unemployment say that with skill, determination and a bit of luck, the end of a job doesn’t have to be the end of the world. Changing jobs or careers can be a good thing later in life, despite the many risks. Many agree that a willingness to push beyond the comforts of location, lifestyle and line of work is vital.

Though there is no single path, there are success stories that offer hope.

After Bonjet Sandigan left a job in computers, he chose to operate a franchise for ShelfGenie, which makes custom shelves.

John Van Beekum for The New York Times

After Bonjet Sandigan left a job in computers, he chose to operate a franchise for ShelfGenie, which makes custom shelves.

Like the story of Bonjet Sandigan, now of Delray Beach, Fla. An information technology specialist, Mr. Sandigan was laid off from Dun Bradstreet in August 2011. But Mr. Sandigan, now 51, has since carved out a new career with ShelfGenie, a seller of custom home shelving.

It was a big switch. Mr. Sandigan grew up in the Philippines and has a computer science degree from Texas AM. For years, he worked in I.T. support, helping customers over the phone. But he never managed to move up. When Dun Bradstreet offered him a severance package, he figured that he could finally afford to take a little time to figure out his next move.

“I did some soul-searching about what’s important to me,” he says. “As you grow, your priorities change.”

His father had been an entrepreneur in the Philippines, and Mr. Sandigan was attracted to the idea of working for himself. With the help of a consultant, he looked into buying a franchise in the I.T. or health care industries. Then he considered a ShelfGenie franchise, which appealed to him partly because it was a turnkey operation.

“The infrastructure is there, the market is there, the policies and procedures are there,” he says. “You just have to follow the procedures.”

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As European Nations Teeter, Only Lenders Get Central Bank’s Help

Since the beginning of the financial crisis, the E.C.B. has been lending euro area banks as much money as they want, trying to maintain the liquidity — or continual flow of money — that is the lifeblood of the global financial system.

But because the bank has refused to offer the same easy lending service to countries like Italy and Spain, it is not confronting the euro area’s most fundamental problem. And so, the governments saddled with debt are having to pay high prices to borrow money on the open market.

Investors pushed up interest rates on Italy’s debt to record-high levels last week during the political crisis there. And even Monday, after the supposedly calming effect of a new, technocratic prime minister in Rome, lenders were demanding that Italy pay interest rates at levels high enough to eventually bankrupt the country.

In an auction of five-year bonds, Italy had to pay a rate of 6.29 percent, compared with 5.32 percent at a similar auction a month ago.

And Italy’s 10-year bonds, which crested well above 7 percent last week in the secondary market, were still dangerously high Monday, at 6.77 percent — more than three times what Germany must pay on comparable bonds. In a further sign of investor anxiety about the weaker links in the euro chain, Spanish 10-year bond yields rose above 6 percent for the first time since August.

It is an atmosphere of mistrust reminiscent of the aftermath of the Lehman Brothers collapse in 2008. European banks are demanding higher interest rates for the overnight lending to one another that is essential to keep money circulating.

Some, fearing other banks’ vulnerability to the debt of Italy, Spain and other beleaguered countries, are refusing to make such loans at all. That is why the E.C.B. has been willing to lend to the banks as needed.

But the biggest fear — the one implicit in all the talk of “contagion” and a potential “Lehman moment” — is not that any one bank will succumb to a liquidity crisis. It is that an entire country might do so, if it can no longer obtain the credit it requires to stay in business.

And at least so far, the E.C.B. has not done the one thing that could help calm that fear: declare that it stands ready to be the de facto lender of last resort to national governments.

If the fear that sent Italy’s borrowing costs to record highs last week becomes a chronic condition, Italy could lose the liquidity it needs to keep paying the holders of its €1.9 trillion, or $2.6 trillion, debt. That would be the Italy Moment — the point at which Rome’s liquidity problem would quickly become everyone else’s.

“We are approaching the point where the E.C.B. has to show its hand and accept its role as a lender of last resort,” analysts at Credit Suisse said in a note to clients Friday. “The question is how much further turmoil is required for it to do so.”

Mario Draghi, the new president of the E.C.B., has insisted that European countries must help themselves, by cutting spending and taking steps to make their economies more competitive.

Jens Weidmann, president of the German Bundesbank and an influential member of the E.C.B.’s governing council, went further Monday, saying it would be illegal to use the central bank to solve government budget problems.

“The increasing demand being placed on monetary policy is dangerous,” Mr. Weidmann told an audience of bankers in Frankfurt. “Monetary policy cannot and may not solve the solvency problems of governments and banks.”

In any case, Italy is strong enough to solve its own problems, Mr. Weidmann said: “What’s needed is the political will.”

What the markets want to hear, though, is not only prescriptions for long-term overhauls but also assurances that the E.C.B. will do whatever it takes to prevent a near-term panic.

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Economix: Answering Questions on the Mortgage Crisis

4:04 p.m. | Updated
Gretchen Morgenson, the Fair Game columnist for Sunday Business, answered questions posed online today about her new book on the mortgage crisis, “Reckless Endangerment,” written with Joshua Rosner. The session was held on Quora, a site devoted to curating knowledge collaboratively by compiling questions and answers. It is the second of three weekly question-and-answer sessions on Quora featuring Times reporters.

Here are a few of the questions that she answered:

What did “too big to fail” mean, in the context of Freddie Mac and Fannie Mae? In the aftermath of the 2008 housing crisis, have we solved that problem now with new rules or systems?

Is the Dodd-Frank Act a good law? What impact will it have on the economy?

How much did we pay to bail out Freddie Mac and Fannie Mae? Are taxpayers getting that money back?

You can also read answers from last week’s session with Diana B. Henriques, a Times reporter and author of “The Wizard of Lies: Bernie Madoff and the Death of Trust.”

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Jury Rebuffs Mattel, Giving Bratz Dolls Rights to a Rival

SANTA ANA, Calif. (AP) — A federal jury on Thursday rejected Mattel’s claims that it owns the copyright to the blockbuster billion-dollar Bratz dolls and instead awarded an upstart rival, MGA Entertainment, more than $88 million in damages for misappropriation of trade secrets.

The jury, which deliberated for nearly two weeks after a three-month trial, also found that Mattel had acted willfully and maliciously in misappropriating MGA’s trade secrets. MGA lawyers said that raised the possibility the judge could increase the damages by up to three times the jury’s award.

The verdict will allow MGA to regain control of its flagship fashion doll, which was introduced in 2001, and to once again try to compete with Mattel’s Barbie doll.

“If Mattel had won this lawsuit, MGA would have been wiped out, and that’s what Mattel wanted to do,” MGA’s lawyer, Jennifer L. Keller, said.

Mattel’s chief executive, Robert A. Eckert, who was present for the verdict, said in a statement that the company was disappointed.

“But we remain committed to protecting the intellectual property that is at the heart of business success,” the statement said. “Mattel’s first priority is, and always has been, to make and sell the best toys in the world.”

Mattel first sued MGA more than six years ago, claiming the Bratz designer Carter Bryant had been working for Mattel when he designed the dolls.

Hundreds of millions of dollars in potential damages and the rights to a blockbuster toy were at stake in the case, which cost each side millions in legal fees as it dragged on.

MGA’s chief executive, Isaac Larian, openly wept while listening to the verdicts. Despite the verdict, he questioned whether Bratz dolls would be able to make a comeback in the aftermath of the suit.

“Mattel killed the Bratz brand. It is never going to be the same level as it was before,” he said.

Still, he hoped the verdict would send a message to Mattel that it was not all right to bully small-time entrepreneurs trying to break into the industry.

“I think justice prevailed in the end,” Mr. Larian said. “Hopefully this will be a major lesson for Mattel.”

MGA has always denied Mattel’s copyright claims and countersued the larger company on the grounds of misappropriation of trade secrets and unfair business practices by engaging in corporate espionage at toy fairs and conspiring to keep Bratz products off retail shelves.

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