The job losses from America’s subprime mortgage mess continue to mount with another 3,700 people being fired today. That means more than 14,000 people have lost their jobs since last Friday in the US mortgage industry and over 221,000 so far this month.
According to US job outplacement consultants Challenger, Gray & Christmas Inc, the US financial industry has cut around 90,000 job cuts so far this year, more than 75% more than the total of 50,327 for all of 2006.
The firm said more than 40% of the 2007 cuts relate to troubles in the mortgage market, including riskier subprime mortgages.
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Lehman Brothers Holdings Inc, the biggest underwriter of bonds backed by mortgages, became the first Wall Street firm to close its subprime-lending unit. It said 1,200 employees will lose their jobs.
Subprime lender, Accredited Home Lenders announced 1,600 job cuts earlier today and one of the world’s biggest banks, HSBC Holdings Plc said it was cutting 600 positions in its US operations and closing a mortgage office. HSBC has so far put aside or written off a total of $US10 billion in its subprime involvement in the US.
And another subprime lender Delta Financial is closing offices in Florida, Texas and California and will chop its staff by 20% or 300 jobs and a company called Quality Home Loans filed for bankruptcy, the 15th lender since December to do so.
Today’s job cuts are equivalent to around 4% of Lehman’s workforce of more than 28,000.
Before today and since last Friday, another Wall Street firm, Bear Stearns, plus mortgage lenders Capital One Financial Corp, First Magnus Financial, Countrywide Financial and Sun Trust Banks have revealed over 10,000 job cuts.
As well, the big tax preparation firm, H&R Block said its Block Financial unit drew down on bank lines while two European mortgage-securities funds had their credit ratings slashed to junk from AAA by Standard & Poor’s because the crisis had stopped them from refinancing.
And who said the subprime mortgage crisis wouldn’t hit the wider US economy?
And US home lenders suffered the biggest increase in late loan payments in 17 years as more homeowners fell behind on mortgages, the Federal Deposit Insurance Corp said in a quarterly release.
Loans more than 90 days past due rose 10.6% to $US66.9 billion in the period ending June 30, the largest quarterly rise since 1990, the FDIC said in its Quarterly Banking Profile released today.
Loans more than 90 days past due grew 36.2%, the largest 12- month increase since 1991.
Residential mortgage loans 90 days delinquent increased 12.6% to $US27.5 billion in the second quarter from $US24.4 billion in the first quarter.
The amount lenders wrote off for bad loans grew 51.2% to $US9.16 billion in the second quarter from $US6.06 billion in the second quarter of 2006.
The FDIC insures deposits at 8,615 institutions with $US12.3 trillion in assets.