Wall Street banks are preparing to trim their annual operating costs as they try to avoid the worst financial crisis since the Great Depression, as they wrestle with a surge in debt.
As the Federal Reserve and Congress continue to push for stimulus spending, banks are expected to cut staff and costs as it begins to weigh cutting back on its massive mortgage program.
That would be a reversal from the strategy of companies that have cut spending for years.
The bank, in a report on Wednesday, said it plans to spend $2.5 billion in 2019 on costs, including $1 billion to trim the staff.
That is down from the $3.6 billion that the banks spent in 2018.
That comes as some companies have begun to roll back spending.
Banks that have struggled financially have cut back on spending and hiring, and they have also lowered their dividend and other perks, analysts said.
As the economy improves, the banks will cut costs, said Michael Fusco, an economist at Moody’s Analytics.
“We’re not going to have as big of a disruption in the business,” Mr. Fuso said.
“But if we don’t have the stimulus, we’ll see more spending cuts.”
The outlook for 2019 is not entirely rosy.
Bank of America Corp. is cutting spending by nearly $1.6 million to $6.6-billion, while Wells Fargo & L.P. is laying off about 1,000 people as it tries to shore up a struggling business.
Bank of America is expected to post a loss of about $1 trillion next year as it seeks to return to profit.
Wells Fargo, which is owned by Bank of China, will report a loss that will be higher than its $1-billion loss in 2017.
Wells Fargo has been the target of regulators for months for its poor record of fixing problems.
It has been under investigation by regulators for not being transparent about the nature of customer transactions and failing to adequately track customer accounts.
At the same time, the bank has said it will hire more than 1,500 people as a result of the recession.
This year, the U.S. Consumer Financial Protection Bureau has been investigating the bank over its ability to verify accounts.
The bureau is also investigating whether the bank improperly paid for mortgage loans that were sold to customers who were not eligible for them.
And last month, a federal appeals court struck down a regulation requiring that banks that offer prepaid cards to customers obtain a written approval from their card issuer before using the cards to make purchases.
Bank of Montreal, the biggest Canadian bank, has also been under scrutiny.
The bank said in March that it would eliminate more than a dozen jobs in a cost-cutting effort.
In addition, Bank of Montreal has been on the hook for more than $300-million for an account that was sold to a person who never received the money.
In a statement on Wednesday morning, the company said it has eliminated about 200 positions in 2019.
“The restructuring efforts will be phased in and continue over the next several years,” the bank said.
Bankstown, a unit of Toronto-Dominion Bank, has been a favorite of the Obama administration as it has expanded into the financial services sector.
The unit has about 1.2 million customers and about 4,000 employees.
It has been criticized by some of its critics for being overly aggressive in targeting people with bad credit and for pushing consumers into risky loans.