Several months back I was visiting the big banks along with other Williams students on the Wall Street trek. Many of the bankers and traders we met were Williams alums. They described their careers, reminisced about the College and made clear just how large of a footprint the College has on Wall Street. At one firm, several of the bankers mentioned to me how, only a few years back, the College was referred to as “the West Point of Wall Street” for the extent to which it fed Wall Street recruiting.
It’s easy to see why Wall Street firms would be drawn to the College with its smart, well-rounded students. What is not as immediately clear is why Williams students have such a keen vocational interest in Wall Street. The College lacks much of the infrastructure that often primes students at Ivy League schools and other elite universities for positions in the finance industry. There is no major in finance. It has no business school. And its extracurricular student groups, which deal with topics germane to finance, are fledgling in comparison with analogous groups at other elite academic institutions.
Some students have decided on a Wall Street career from the time they matriculate, drawn by stereotypical notions of banking careers, the high pay or a litany of other factors. In my experience – and yours may differ – this group is small. The larger contingent of the Wall Street applicants are students who are still identifying their long-term career interests. These students are attracted to jobs at banks and funds by the stability and stellar compensation such positions afford. At the very least, these jobs offer business experience and can be gateways to other careers.
These attractive features of employment in finance do not explain, however, why Williams grads have a uniquely high predilection for employment at financial firms. Beyond the relative lack of programs or groups for financial education at the College, the paradox of Williams students’ predisposition to Wall Street is that it coexists with a pervasive view among students in which Wall Street is subject to great derision. Among those at the College who have no intention of considering a Wall Street career, Wall Street is not viewed with mere indifference, but often scorn.
This antipathy toward the financial industry is misguided and unmeasured. Criticisms from this school of belief often go as follows. Bankers are overpaid. We should have let the banks fail. Banking isn’t a “real” job; it’s just siphoning off value that other people have generated. These critiques are all flawed, imprecise or completely wrong.
It’s true that executive pay has run wild, but that’s not just true in banking, and the solutions ought not be tailored to banks alone. Arguing that analysts are overpaid is odd. There’s no innocuous way to alter this market outcome. If people are dissatisfied with the insufficient level of income redistribution in the United States (as I am), they should take it out on the tax system, not bankers. And when it comes to letting the banks fail, we all saw how smoothly the collapse of Lehman went. Imagine not having bailed the others out – it would have been cataclysmic. Banks are highly intertwined with the entire economy. The cost of allowing such entities to fail and attempting to rebuild them would be massive. The services provided by banks are important. Their most fundamental role is to match those who have capital with those in need of it. But their other activities, such as market-making, a form of liquidity provision, are also valuable, albeit increasingly subject to automation.
So what’s the upshot of all this? We need a shift in approach when it comes to finance. Our relationship with Wall Street gives good cause for a group dedicated to financial education. That’s why I co-founded the Williams Investment Club. Through the study and practice the group engages in, members will develop a better understanding of finance and be able to make informed decisions about whether they’re genuinely passionate about the work that Wall Street careers entail.
The club’s mission extends beyond career preparation, however. Personally, I am interested in a career in public policy, and don’t wish to pursue finance as a vocation. But I am very interested in finance, its role in the economy and the government’s role in shaping the financial industry. Rather than treating financial firms and careers with blanket contempt, we should approach finance, like other subjects, with academic interest. We should look critically for regulatory fixes to incentive problems, rather than spurn the financial discipline and its applications. Many great thinkers the likes of Markowitz, Fama and Shiller have made extraordinary academic contributions in the context of finance. Let’s make the Williams Investment Club a place for academic exploration.
Hank Lee ’19 is an economics major from Wayzata, Minn. He is currently abroad at Oxford.