Why Goldman’s Lay Offs Have Wall Street Worried

Wall Street has good reason to be rattled by the news that Goldman Sachs laid off senior personnel, including managing directors, last week, according to a CNBC report. It is likely the beginning of a new kind of deleveraging that will occur at every major Wall Street firm.

It’s well known that Wall Street has been forced by markets and regulators to delever in the wake of the financial crisis. For the most part, this has been a matter of financial deleveraging: reducing debt to capital ratios, reducing dependence on short-term debt, reducing compensation (especially bonuses) to revenue ratios.

But many Wall Street firms, especially Goldman Sachs [GS  92.21     1.21  (+1.33%)   ], have engaged in another form of leverage that has persisted through the crisis but now seems ready to crack…

Read all about it at http://www.cnbc.com/id/47690943