Utah could see thousands of jobs eliminated

Thousands of Utah financial-industry jobs could be lost in the next year or two in the wake of this week's global crisis that has roiled major banks and Wall Street firms, according to the Utah Department of Workforce Services chief economist.

Department economist Mark Knold said Utah will probably lose about 3,000 jobs during the next two years.

"I'm not sure exactly how big it's going to be in magnitude, and by whom, but we do have to do some forecasting," he said. "There's going to be some consolidations and some closings."

He attributed the potential for such job losses to the global financial crisis, magnified by this week's bankruptcy filing by Lehman Brothers, Merrill Lynch's sale to Bank of America, and a U.S. government rescue plan that would use more than a half trillion in taxpayer dollars to buy bad loans and debt weighing down U.S. financial companies.

Experts call the events part of the worst financial crisis on Wall Street since the Great Depression. President Bush contends that the risks to taxpayers in the rescue plan are outweighed by the risk of doing nothing. How this will play out in Utah is yet to be known. But for now, most Utahns will be conducting their daily financial business as usual.

A series of dominos began falling Sunday when investment giant Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy following huge losses in the mortgage market and its inability to find a buyer. Shortly afterward, another Wall Street giant, Merrill Lynch, agreed to be purchased by Bank of America in a $50 billion all-stock transaction. The stock markets plunged to the worst levels since the 2001 terrorist attacks.

Then, troubled American International Group Inc. (AIG), the world's largest insurer, received an $85 billion loan from the Federal Reserve — the second time this week federal officials used taxpayer money to rescue a private financial company. The thinking was that letting AIG fail would further rock markets and an already fragile U.S. economy. In response, Asian and European markets rebounded.

On Thursday the Federal Reserve and central banks in Europe and Asia put as much as $180 billion into money markets to stop a lending logjam between banks. Then came word the government was crafting a larger rescue plan, resulting in a stock-market rally.

The Bush administration on Friday laid out its plan to buy a half-trillion dollars worth of bad mortgages and other bad debt that has been weighing down U.S. financial companies — the most sweeping government intervention to rescue failing markets since the Great Depression. Details will be worked out this weekend.