The Wall Street bank announced on Tuesday morning that it had slashed 1,700 positions in the past three months. It’s the firm’s largest quarterly reduction in headcount since the financial crisis, and it underscores the troubles Goldman is having maintaining profitability at a time when Dodd-Frank and other regulations have significantly limited its ability to make money.

The firm now appears to be leaning toward slashing budgets as the key to boosting its bottom line. Goldman CFO Harvey Schwartz, in a conference call with analysts, called the quarter challenging, and said that the company had embarked on a cost-cutting plan that will save it $700 million a year. Earlier this year, Goldman told employees to cut back on travel plans.

The layoffs mean that Goldman reduced its staff by 5% in the second quarter alone. It’s the third quarter in a row that the firm has eliminated positions. All told, Goldman (GS) has cut 2,100 employees in the past nine months.

On top of new regulations, the reductions come at a time when Wall Street’s business in general has been slowing. Goldman reported better than expected earnings for the second quarter. But revenue from a number of key segments, including equity underwriting and stock trading, were down dramatically.

Based on that, Goldman’s cost-cutting plans may not go far enough. The firm had $10 billion in expenses in the first half of the year alone. So cutting $700 million would represent only a 3.5% reduction in annual expenses. What’s more, even after the second quarter cuts, Goldman’s return on equity in the quarter was only 8.7%. If the firm were to cut another $700 million out of expenses, that would only increase its ROE to just under 10%, well below the ROE Goldman had before the financial crisis, when that figure regularly topped 20%.

On a conference call with analysts, CFO Schwartz was asked by veteran bank analyst Mike Mayo whether the firm had cut too much. “We view this as a very thoughtful exercise, ” Schwartz said. “We certainly haven’t sacrificed,” our commitment to clients.

But it’s not clear that the firm is all that committed to cost-cutting where it matters. Despite the layoffs, pay doesn’t seem to have been dented at the firm. For the second quarter, Goldman gave its remaining 34,800 employees a 30% raise. Average pay (in compensation and benefits) rose to $95,718 for the second quarter of the year. That means the average Goldmanite, including assistants, junior reporters, and IT employees, based on the second quarter, is still paid just over $380,000. Indeed, not much sacrifice there.