Warren Buffett’s Bank of America is implementing a plan that will lay off 16,000 workers by the end of the year, the Wall Street Journal reported:
Bank of America Corp. is accelerating a broad cost-cutting plan and has set a target of shedding 16,000 jobs by year’s end—cuts that would see the company relinquish its title as U.S. banking’s largest employer.
The reductions for the final six months of the year, outlined in a document given to top management, are part of a larger effort to retool Bank of America into a leaner and more focused enterprise. The plan is designed to make the company take less risk, generate more revenue out of existing customers and use an investment banking operation inherited from Merrill Lynch & Co. to become a major deal maker around the world.
Firing workers appears to be very lucrative for one of Obama’s key supporters, Warren Buffett. Buffett invested $5 billion in Bank of America in August 2011. As part of the deal, Buffett received warrants that allow him to buy 700 million shares of Bank of America stock at a strike price of $7.14 a share. Bank of America stock closed yesterday at $9.29, which would have yielded a profit of $1.5 billion if Buffett exercised his warrants.
In July, Buffett told CNBC’s Becky Quick, “The general economy in the United States has been more or less flat, and so the growth is tempered down.”