Most job cuts are happening in the fixed income divisions and more particularly at the structured finance level (CDO). Since the credit crunch, entire structured finance teams have been laid off as there is certainly nothing more to originate and bulge bracket banks have been unable to syndicate what has been on their B/S. What is left is then massively written down as those presumably off B/S items have to be reconsolidated because of the continuous margin call exposures the banks have to those structured products(many exposed to sub-prime mortgages in the US). Repatriation also means massive mark down given the lack of liquidity, particularly buyers, for these investment types and BaselII requires prudence with the quick MtM of possibly sour investments.
LBOs have also been affected by the crunch as many of the large buyouts have been taken on by the large banks for syndication but following the crunch, the syndication market has simply shut down. Those banks are now "choked" and have to free up some B/S room in order to underwrite more business but in order to free up room, they have to sell at large discounts, and even then, buyers are very reticent. Thus, this log jam has resulted in many banks laying off people and should this persist much longer, M&A people will also be affected as they would be unable to secure debt financing for their deals.
Keep in mind that it is very hard for banks to hire whole teams again should the market pick up anytime soon so they have been on a hold mode until now. Should the crisis persist, there will be much more lay offs to come. So far, there has been 300B in write downs and some proponents have argued that more is yet to come and total write downs should be in the 500B level. It's very grim indeed.