Will Nov. 17, 2008 — the day that Citi announced it would eliminate more than 50,000 jobs (roughly 20 percent of its workforce) — be remembered as a landmark day in the history of financial services? After all, Citi's plans signify the most job cuts in one
announcement since 1993, when retailer Sears Roebuck & Co. announced it would lay off 50,000 employees and IBM confirmed it would terminate 60,000 employees, according to executive outplacement firm Challenger, Gray & Christmas.
The news from Citi was so startling that Goldman Sachs' announcement earlier in the day that seven top executives would forgo bonuses this year took a bit of a backseat. Still, by the end of the day New York Attorney General Andrew Cuomo was urging Citi CEO Vikram Pandit and other top executives there to decline their own bonuses.
"As Citigroup suffers, so too do investors, employees and taxpayers. At the very least, Citigroup should follow Goldman Sachs' lead and announce quickly that top executives will not be receiving bonuses this year," Cuomo said in an official statement. "Citigroup's stated intention to wait until the new year to make its bonus decisions is a mistake. After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share of these difficult economic times."
So this is our world now. At least we haven't become so inured to bad economic news that an announcement of 50,000 job cuts fails to shock us. Ironically, had Citi announced a significant number of layoffs a year or so ago, it probably would have been welcomed (at least by Wall Street) as relatively good news, as the bank has been under tremendous pressure to cut costs and gain efficiencies. In the current environment of crisis and lack of confidence, however, it's hard to view these steps as strategic, although the presentation that Pandit delivered to Citi employees stated that the staff and expense cuts would put the company in a "strong competitive position to seize future opportunities."
OK, if you say so. Certainly it is in the interests of everyone in both the banking and technology industries for this plan to work (the same can be said about TARP, PNC/National City, J.P. Morgan/WaMu, etc.). History will judge if Nov. 17 was a turning point or another step to oblivion.