As Wall Street scrambles to resolve this week's historic economic crisis, seismic changes to the foundations of the financial world have threatened millions of jobs and left Dartmouth's prospective investment bankers unsure of what lies ahead for their careers.
The House of Representatives' vote to reject the proposed $700 billion bailout Monday increased fears about the already-burdened financial sector, as the Dow dropped nearly 7 percent by the end of the day. As the ongoing economic instability impacts Dartmouth graduates scattered across Wall Street -- with titles from C-level executives to first-year analysts -- students in Hanover have begun to feel the heat.
Some of the biggest names in American finance -- and frequent employers of Dartmouth graduates -- such as Bear Stearns and Lehman Brothers, have collapsed in the course of the year's ever-worsening financial downturn, and others, like Goldman Sachs and American International Group, have been forced to make major operational changes in order to survive.
"There will be fewer [job] opportunities available, because there are going to be fewer firms recruiting," said David Spalding '76, vice president of alumni relations and former managing director at Lehman Brothers. "Everyone is in kind of a wait-and-see mode down there."
The American financial industry has undergone a fundamental restructuring in recent weeks, as once-lucrative independent investment firms are absorbed into institutions with lower risk strategies and business ventures, such as commercial banks. The reduced risk could well mean smaller returns for companies and the employees who handle their investments.
"You're looking at some of the investment banks who were levered 30 to one," Spalding said, referring to firms' practice of borrowing 30 times the funds actually controlled by the company, to magnify returns on their investments. "As banks, they'll have to reduce that lever to something like 20 to one. It has to reduce the level of returns you can achieve."
With the first resum-drop deadline for entry-level job recruitment just days away, Dartmouth students are facing the pressures of a tightening job market. This year's Employer Connections Fair, which kicks off the corporate recruiting season this Wednesday and Thursday, has seen considerable turnover in the financial corporations that will send representatives, according to Monica Wilson, associate director of employer relations for Career Services.
"We had a number of cancellations, but also a number of additions," Wilson said. "We still are working with over 100 organizations that plan on coming to campus. But the companies that are investment banks have cut back or canceled."
The extent to which companies' recruiting goals will be downsized from previous years is uncertain, and a number of students considering careers in finance have expressed concerns that fewer spaces will be available for interns, fewer full-time positions will be offered to recent graduates and that job security appears bleak amidst market instability.
"The job security that people thought they had is no longer there. People are a lot more uneasy -- certainly I am," Ari Gayer '09, who has interned twice with Merrill Lynch, said, adding that he knew of other students interested in finance who are now considering taking a year off in hopes of waiting out the market turmoil.
Some students have already opted to put their finance careers on hold, choosing to attend graduate schools after graduation, George Panos '09, who interned in the investment-management division of Goldman Sachs this summer, said. He added that for those who do apply for company posts, finding employment would be difficult.
"For kids graduating in the next year or two years, the employment landscape is just drastically different, even now as opposed to three weeks ago," Panos said, suggesting that the effects of the bailout rejection could be far-reaching. "Companies in other sectors of the economy are not going to be able to finance their operations. That's the biggest fear -- this slowdown is going to spread ... into the broader economy."
Alex Cook '09, who interned with the investment-banking division of Merrill Lynch, said he and his fellow interns believed the process of obtaining positions was more competitive than in years past and remain concerned about their prospects for careers in business and finance. While interns had been told the markets would turn around and begin an upswing, he said, it hasn't happened yet.
"We see, and I've experienced high anxiety just because a lot of people don't know what will happen in the future," Cook said.
The prospect of shrinking salaries and smaller bonuses has not influenced the decisions of most students considering finance -- at least not in public. Most students questioned by The Dartmouth noted that as entry-level employees, their pay would not likely rival the salaries of the top investment analysts who once defined the field.
But despite widespread concern about the current stability of the financial sector, students also commented on the benefits of experiencing the downturn from a Wall Street office. Several students observed that, although there may be more competition for jobs in finance at the moment, working for firms during a downturn can be a beneficial experience.
"If you're going to get into finance, get in now," said Lily He '10, who was hired as an intern for the Mergers and Acquisitions Division of Merrill Lynch, said. "If you can make a difference in a company that's doing poorly, you'll be able to stay with them forever."
She said that in her experience, people have not been concerned about a bad economy. Though she was initially concerned about the security of her internship after Bank of America purchased Merrill Lynch, she said that, in her opinion, the company has continued with business as usual throughout the merger.
"The general feeling is that there aren't really that many unstable firms," Anirudh Jangalapalli '09, who interned for the investment-banking division of Deutsche Bank, said, in contrast to more pessimistic estimates abounding in financial circles. "There's still that sort of worry, but generally ... you always want to get into the industry when it is at a low point. You want to get in when the market's just starting to go up again."
Similarly, none of the students interviewed by The Dartmouth knew of anyone who had abandoned careers in finance for employment in another industry. While some students had reconsidered the area of finance they planned to enter -- moving away from investment banking and into consulting, for example -- jobs in the finance sector continue to be an attractive career option.
"People kind of whine and complain about it, but I don't know of anyone who's actually not going into [finance] because salaries are down," Christine Donnelly '09, who interned with a large foreign investment bank this past summer, said.
Spalding agreed that finance will likely remain alluring for graduates.
"At the end of the day, Citigroup two years ago was paying what Lehman Brothers was paying," Spalding said. "You may not have had the trading superstars making 20, 25 percent a piece, but when it comes to the bread-and-butter bankers, there were people doing well at both," he said, referring to experienced managers as well as rising employees.
Wilson has also seen new opportunities arise for Dartmouth students working in finance, citing a number of recent Dartmouth graduates who contacted Career Services after losing their positions at Lehman Brothers. Several financial-services firms have also made inquiries looking for displaced but experienced employees.
"I'd say there will always be plenty of opportunities in financial services," Wilson said. "They may not be as lucrative or attractive, given the returns are not going to be as high in some organizations. But people in those fields will always have opportunities."
