Are Biden's Wall Street Donors Getting Pink Slips?

In perhaps one of the most callous moves an employer can make right before Christmas, a “person with knowledge of the situation” told CNBC that Wall Street giant Goldman Sachs would lay off up to 8% of its workforce early next year.

The layoffs will impact every division of the bank and will likely happen in January, according to the person, who declined to be identified speaking about personnel decisions.

That’s ahead of an upcoming conference for Goldman shareholders in which management is expected to present performance targets. The New York-based investment bank typically pays bonuses in January, and it’s possible the layoffs could be a way to preserve bonus dollars for remaining employees.

Goldman already cut jobs in September, saying it was renewing the pre-pandemic rhythm of the business where low performers were let go before bonuses were paid.

The bank is reinstating a tradition of annual employee culls, which have historically targeted between 1% and 5% of lower performers, in positions across the firm, according to a person with direct knowledge of the situation.

At the lower end of that range, which is the size of the expected cull, that means several hundred job cuts at the New York-based firm, which had 47,000 employees at midyear.

Steep declines in investment banking activities earlier this year created the conditions for the first round of layoffs on Wall Street since before the pandemic. However, those annual moves are not usually followed by deeper cuts.

The newly announced reductions could cut as many as 4,000 employees and follow Morgan Stanley, which cut 1,600 last week. CNBC commentator Hugh Son noted that the two rounds of cutbacks at Goldman Sachs could indicate that the outlook for 2023 has deteriorated. He added that Goldman might have to make the deepest cuts among the large banks because it made a foray into consumer banking that did not perform well.

Yet it seems fitting that some of Joe Biden’s biggest donors are feeling the pain first.

People in the securities and investment industry will finish the 2020 election cycle contributing over $74 million to back Joe Biden’s candidacy for president, a much larger sum than what President Donald Trump raised from Wall Street, according to new data from the nonpartisan Center for Responsive Politics.

CNBC also reported that Biden benefitted from significant contributions from finance leaders and that the industry strongly favored Biden.

Biden’s campaign chairman, Steve Ricchetti, met with finance executives in January to encourage them to back his candidate, CNBC reported at the time. Attendees included Evercore founder Roger Altman, longtime investor Blair Effron, Blackstone Chief Operating Officer Jonathan Gray, former Citigroup executive Ray McGuire, Centerbridge Partners co-founder Mark Gallogly, and former U.S. Ambassador to France Jane Hartley.

Most of these people ended up backing Biden either by hosting fundraising events or donating to his cause.

The only recent candidate that pulled in more from the big players on the Street was Hillary Clinton. May they all enjoy their lower bonuses and reduced profits.

Their preferred candidate blew extraneous dollars into a hot economy, draining Americans’ savings to a 17-year low. In June, two out of three consumers reported spending their savings to keep up with inflation, and by September, household debt was increasing at the fastest rate in 15 years. New business applications, which soared in 2020 and 2021, are also starting to drop off.

Wall Street layoffs and other signals make it difficult to take the administration’s rosy economic outlook seriously. Inflation is still at 40-year highs despite a slight month-over-month decline in November. While falling prices last month had some predicting that the brutal run of inflation was over, Federal Reserve Chairman Jerome Powell threw cold water on any celebrations earlier this week.

The Fed raised the interest rate by half a point on Wednesday to 4.4%, and Powell laid out a plan to raise rates to 5.1% in 2023. The central bank also revised the growth projection for 2023, down from 1.2% to 0.5%. It also bumped up its unemployment projection to 4.6% for 2023 and 2024.

Now, some of Biden’s donors on Wall Street may be included in that number. Quite a return on the investment that Wall Street made in his election.