Jobs being lost during credit crunch

CHALLENGER, GRAY & CHRISTMAS, INC.
DATE August 21, 2007

This is just a sample of some of the real effects of the mortgage troubles.


Housing Woes Ripple Through Financial Sector
DOWNSIZING SPREE CLAIMS MORE THAN
11,000 JOBS SINCE LAST FRIDAY

CHICAGO – A wave of job cutting has swept through the financial
markets as the housing market continues its prolonged decline. After
a fairly quiet July, financial institutions have announced 20,957 job
cuts since August 1, with 11,040 or 53 percent coming since last
Friday.

With few exceptions, the cuts are directly related to housing market
woes, which have quickly spread into the lending industry, according
to global outplacement consultancy Challenger, Gray & Christmas,
Inc., which tracks job-cut announcements daily.

The 2,400 job cuts announced Friday by SunTrust were attributed to
cost cutting measures in place before the current collapse in the
credit markets. The other 8,640 job cuts announced over the last
three business days by First Magnus Financial Corp., Countrywide,
Capital One and the lending unit of Bear Stearns, were tied directly
to the housing market situation.

So far this year, the financial industry has announced a total of
87,962 job cuts, 164 percent more than through the end of August in
2006. Of this year’s cuts, 41 percent were related to the mortgage
and subprime lending markets.

“There are two big issues behind the cuts. First, demand for new
mortgages and home equity loans and other forms of credit have fallen
off dramatically. The other issue is the increasing rate of defaults
and foreclosures, which is leaving the lending institutions unable to
meet their own financial obligations,” said John A. Challenger, chief

executive officer of Challenger, Gray & Christmas.

“Last week, mortgage lenders basically told their loan officers and
call center representatives to simply stop taking calls. They
basically stopped on a dime, which means that thousands of call
center workers, data processors, administrative staff, etc., are
sitting idle.

“The situation is worsened by the fact that other financial
institutions not directly associated with housing, such as Bear
Stearns and Lehman Brothers, have been investing billions in mortgage-
backed securities, which has made them extremely vulnerable to the
turmoil in the housing market. Just last week, Bear Stearns
announced that 240 workers would be laid off at its lending unit.”

Of course, the financial sector is just one of the victims in the
current housing market collapse. Job cuts in real estate and
construction have also climbed dramatically in 2007. Real estate
companies have announced 1,950 job cuts so far this year. This does
not include the hundreds, if not thousands, of independent realtors
and agents who have simply walked away from the field due to the
demand downturn.

Meanwhile, construction firms have announced 19,670 job cuts in
2007. Again, this number may underestimate the actual damage, since
many construction crews are small operations that rely on independent
contractors. The lack of work for these individuals would not be
reflected in job-cut announcements.

“We are also seeing job cuts from the companies that provide home
building equipment, materials and supplies. The impact is also being
felt by manufacturers of home furnishings, painting supplies,
household products, etc. The end of housing-related job cuts are by
no means in sight. It could be months before we reach the peak,”
said Challenger.