“Limping toward the end of a dismal year, Wall Street firms are struggling to decide how many more employees to dismiss before dividing up their shrunken profits,” writes Patrick McGeehan in today’s New York Times.

“Several hundred more investment bankers and traders are likely to lose their jobs before the end of the year as firms, including the Goldman Sachs Group, try to reduce costs as the market slump drags on. Still, some firms, like Lehman Brothers Holdings, said they would try to avoid broad layoffs and would resort instead to paying smaller bonuses to many employees.”

“Those approaches were contrasted yesterday when Goldman and Lehman reported third-quarter earnings and delivered bleak forecasts for the next several months. Despite an 11 percent increase in profit last quarter, Goldman said it probably would cut more jobs this year. But Lehman, whose earnings fell a disappointing 37 percent, said it was comfortable with the size of its staff.”

” ‘We have to decide who to keep, how much to pay them and how to pay them,’ said David Viniar, Goldman’s chief financial officer. ‘Those decisions will consume most of my waking hours for the next few weeks, as well as the time of most other senior managers on Wall Street.’ “

“Mr. Viniar said the size of Goldman’s staff would ‘continue to trend downward’ this quarter, but he declined to give specific numbers. Some analysts, however, interpreted his comments as a signal that Goldman could cut another 4 percent of its employees, or more than 800 people.”

“Goldman, which was a partnership until it went public in 1999, has cut more than 2,800 jobs, or 12 percent of its employees, in the last year. Those cuts reduced the firm’s expenses in a year of sinking revenue.”

“Brokerage firms that are more dependent on trading by individual investors, like Merrill Lynch & Company and the Charles Schwab Corporation, have pared their payrolls more than 25 percent in a few rounds of layoffs the last two years. But at investment banks, there has been ‘a lot of quiet shoulder-tapping’ that probably is ‘a precursor to a larger layoff,’ said Joan Zimmerman, a partner at Rhodes Associates, a consulting firm. With fees trickling in and lawsuits by angry investors piling up, those who keep their jobs are facing ‘one of the most grueling bonus periods in recent memory,’ she said.”