That Bear Comes Growling HomeGeoffrey Smith
Pampered Wall Street types, used to bull-market riches, are starting to feel the pinch of this year's declining market. Securities firms' pretax net profit for 1994's first quarter is less than half the $3.6 billion logged in the same 1993 period, estimates the Securities Industry Assn. That is producing a round of cost cuts.
Charles Schwab, which hired at a torrid pace last year, has asked employees to take "sabbaticals" for up to six months at 25% pay. PaineWebber is requiring that all new hires be approved by headquarters. Merrill Lynch is "selectively reducing hiring" in all but essential areas. Merrill is also clamping down on travel, entertainment, and other expenses. Fidelity is "reassigning" 380 telephone operators to other jobs, expecting a slow summer.
On the plus side: This year's cuts are tame compared to past market downturns, largely because most Wall Street firms are still lean from 1987 and 1990 austerity.