Wednesday, August 06, 2008
Expense Cuts - More Pee On The Forest Fire
From the Financial Times:
Merrill Lynch has sharply cut the use of private jets among its senior managing directors by requiring them to obtain direct clearance from the global head of investment banking to hire one and to demonstrate that there is no more efficient means of transport.
The new policy is part of a drive by the Wall Street bank to reduce administration and non-payroll expenses. By bearing down on these costs, Merrill aims to give itself the scope to limit lay-offs and pay better bonuses to top performers, even as the economic slowdown eats into investment banking revenues.
Andrea Orcel, Merrill's head of global origination, said: "Our top priority has been non-compensation expenses where substantial reductions can and have been achieved without affecting our franchise. We have focused first on expenses which are within the control of our most senior officers to make sure the division is led by example."
The restrictions on flying by private jet are also meant to demonstrate that the firm's top brass must set an example to the rank and file in tightening belts. Other changes include requiring bankers to travel by taxi rather than limousine and reduced allowances for dinner on the job.
Shouldn't "senior management" be setting an "example" all of the time????
Not just went feces and fan collide!
More from that article:
Merrill is far from alone in bearing down on so-called non-compensation costs. Bankers at UBS are permitted to fly business class in Europe only if the flight is three hours or longer, or five hours or longer in the US.
At Goldman, staff have to contribute to repairs to their BlackBerrys if the damage is deemed to be their own fault.
Staff MAY have to fix their own BlackBerrys???
So what, Goldman has roughly 27,000 employees times $200 for brand-new-Blackberrys equals a mere $5 million. And that would be if every single employee busted their Blackberry and was deemed "at fault".
I don't really think a $5 million dollar consideration means too much for a company that does $40 billion in revenue, do you?
So on one hand you have companies urinating on the forest fire with their expense cuts...
And on the other hand you have the government, with its dollar debasing, debt escalating bailouts that is essentially throwing gasoline on the fire.
That blaze is gonna keep burning.