As the subprime mortgage crisis continues to sweep the country, with headlines almost daily reporting more billions in write-downs at top banks, some uncertainty rises among students intending to enter the financial world. Around ten percent of Williams graduates last year entered the financial sector, and the Office of Career Counseling (OCC) predicts a similar number for the class of 2008. While the majority of investment banks will honor all of their summer and full-time job offers, the Wall Street slowdown has certainly led to questions regarding the security of jobs in the field.
The collapse of Bear Stearns last month has left approximately half of its summer and full-time college hires unemployed. J.P. Morgan Chase, the company that acquired Bear Stearns following its collapse, will continue to honor the Bear Stearns offers in areas that don’t overlap with J.P. Morgan. Such divisions include commodities, prime brokerage and asset management, said Brian Marchiony, a J.P. Morgan spokesperson.
People outside those areas may not be as lucky. Jake Gorelov ’09 had been offered a summer internship in the equity research division at Bear Stearns and had his offer pulled ten days ago. J.P. Morgan offered Gorelov a paid 10-week internship at a non-profit of his choice, an option the bank will give to all those whose offers are being rescinded. In addition, Gorelov will have the opportunity to apply early for a full-time job at J.P. Morgan next year.
Marchiony said it was too early to tell how the slowdown will impact next fall’s recruiting season. “We’re constantly evaluating the process, and many decisions will be made over the next few months,” he said, adding that Williams will remain a key recruitment spot for the bank. “Our belief is that you have to continue to create a pipeline of strong talent. We’re seeing a slowdown across Wall Street, but our numbers [of college hires] are still in line with past years’.”
John Noble, director of the OCC, said that besides Bear Stearns, Williams students with Wall Street job offers have not been negatively affected by the recent downturn. He added, however, that given earlier signs of weakness in financial markets, investment banks may have been more cautious in tendering offers in the first place. “It’s too soon to tell, but my intuition tells me that there was less hiring going on by the banks for both full-time and summer hires,” he said.
For example, J.P. Morgan only offered full-time jobs to two students from the class of 2008, compared with seven from the class of 2007. “The pull-back was particularly acute in terms of juniors getting summer internships as well,” said Tim Geoffrion ’08, one of the two who plan on working at J.P. Morgan next year. “It’s really a bum deal because there are a lot of great kids that would have gotten a job any other year.”
Clarissa Romeras, a spokeswoman from Morgan Stanley, declined to comment on this year’s hiring or on whether offers were being rescinded. A spokeswoman from Goldman Sachs acknowledged that the bank was not pulling back any of its offers, but declined to comment any further.
Noble asserted that despite facing significant economic difficulties, investment banks are determined to continue hiring entry-level employees. “They learned a lesson during the dot-com bust that they need to keep the pipeline of new talent flowing or run the risk of being caught shorthanded when things turn around,” he said, explaining that the cost of taking a new analyst on board is significantly lower than keeping a middle- or senior-level employee.
Christine Marshall ’08, who interned at Bear Stearns for two summers and had accepted a full-time offer as a fixed income analyst, will work a similar position at J.P. Morgan next year. Al Hu ’09 was offered a summer internship in the fixed income division at Bear Stearns, which J.P. Morgan will also continue to honor. While those with secure offers may not be concerned right now, Hu said that the credit crisis could significantly impact them in the long run.
Hu added that given the potential difficulty in landing offers at financial firms in the upcoming months, many students are now considering other options, such as extra schooling. “As college hires, our perseverance in weathering this downturn will strengthen our long-run employability,” he said.
Those interested in pursuing jobs outside of the financial sector may not feel the impact of the credit crisis until next fall, Noble said. “In a situation like the one we have right now, the negative impact of the financial markets will probably take a while to trickle down to affect jobs in the public and nonprofit sectors.”