Toomre Capital Markets LLC (“TCM”) has written previously about how many people are employed by the Wall Street structured finance deal machines in the post Can Wall Street be Trusted to Value Risky CDOs? Today rumors are flying that major layoff announcements are about to be implemented by many of the big investment banks. Supposedly, many of the well-paid investment banking personnel focused on structured finance will be let go within the next few weeks.

During the past few weeks, various portions of the credit markets have seized up, particularly in the structured finance sectors like non-conforming mortgages, Collateralized Debt Obligations (“CDOs”) and Asset-Backed Commercial Paper (“ABCP”). Rumors are rampant about the big losses being suffered by the structured finance areas of various investment banks and hedge funds.

There have been all sorts of crazy talk about how much this or that firm has lost. Some rumors suggest that many smaller hedge funds have suffered losses since Memorial Day in excess of 25%. The numbers being tossed around are literally hundreds of millions of dollars and the investment banks collectively are said to have lost a low ten billions of dollars.

Who knows what if any part of these rumors is true? Surely, some of the rumors are wild speculation and the numbers being speculated about are wildly exaggerated. Many people involved in structured finance areas have been on edge since the major losses started hemorrhaging in early July.

On the afternoon of Wednesday August 29th 2007, rumors of pending layoffs in the structured finance areas are being reported in the media. CNBC and The Wall Street Journal are reporting that major layoffs are going to be announced and start to be executed in the week after Labor Day. Specifically, CNBC is reporting that Goldman Sachs, Lehman Brothers and Bear Stearns are planning to pare some their expensive structured finance personnel.

Apparently, the plan is to have the layoffs done in time for the horrendous third quarter earnings announcements coming in the second and third weeks of September. When these layoff rumors turn into reality, the tone of the Wall Street business will turn even more negative.