Troubled market bad for business
Despite a string of some of the country’s largest financial institutions being bought o ut or going under, including the bankruptcy of Lehman Brothers on Monday and a government bail out of AIG the very next day, John Stevens, an economics professor, said Franklin students shouldn’t be overly concerned on it will affect the job market. "We don’t have that many students who will go directly into the large financial firms, [which are] the ones who are being hit," he said. In general, the Midwest job market is not slowing as much as some other parts of the country, said Kirk Bixler, the director of career services. Bixler said 15 Franklin students plan on attending Accounting Interview Day in Indianapolis on Saturday. He said 25 firms and government agencies are scheduled to have booths, the same number as last year. "In talking to those firms, they are not cutting on internships or full-time positions," he said. Stevens said while the openings in the banking sector, a place he admitted Franklin has had good luck placing graduates in, will decrease, he expects the demand for marketing jobs to hold steady. He added the extra scrutiny on the banking sector may result in a better job market for another Franklin major – accounting. "If you think that banks or others need more regulation then some of the people who would
be doing the auditing and the regulation can be accounting," he said.
President of the Business Club senior Jeremy Gale said while he agreed that Franklin students probably won’t directly feel the affects of specific firms failing, the general state of the economy has made getting internships much harder, even at firms that are doing well.
"These types of things should just say to us that we should work so much harder," Gale said.
What’s happening?
While the recent shake-up won’t affect many Franklin business students, for those college students who had dreams of a job on Wall Street, it means they’re plunging into one of the worst markets in recent history.
Lehman’s collapse and AIG’s troubles are only the latest additions to the turmoil that has gripped the American financial industry over the past year.
Merrill Lynch also announced this week that it would sell itself to Bank of America for $50 billion, effectively spelling the end of the venerable brokerage. And in March, Bear Stearns, another Wall Street mainstay, accepted an offer from JPMorgan Chase to be sold for $10 a share — about a tenth of what it once was worth less than a year ago. The Dow Jones Industrial Average yesterday posted its sharpest decline since the aftermath of the Sept. 11, 2001 terrorist attacks.
Monday’s events mean former Lehman interns can’t return to the Manhattan-based bank where they often put in upwards of 90 hours a week, in hopes of securing a job.
Lehman was hit hard by the aftershocks of a decline in U.S. home prices that started last year. That led to defaults on loans and caused the value of assets backed by mortgages to plummet. Those woes spread throughout the global financial system, causing firms like Lehman to post massive losses and writedowns on assets.
The firm filed for Chapter 11 bankruptcy protection Monday. Though it’s in talks to sell parts of its business and most employees haven’t officially been laid off, one thing is clear: Lehman Brothers will soon cease to exist in any recognizable form.
Along with the thousands of former Lehman employees now looking for work are the firm’s former interns, like one University of Michigan senior who asked to remain anonymous because she wasn’t authorized to talk to the media about Lehman.
A year ago she received internship offers from Lehman, Deutsche Bank and Citigroup. She said she chose Lehman for the internship because it was "one of the more prestigious banks on the Street," but she ultimately rejected its full-time job offer.
Now, she’s left looking for investment banking jobs in a radically refigured market.
"Coming in, I had a lot of options and now it’s very, very limited," she said. "No banks are hiring, and it’s not as easy as it was in the summer."
Justin Killion, a fellow U of M senior, said the looming banking crisis was already evident this summer when he worked as an intern for JPMorgan in New York.
"The feeling that I felt, and that my friends at a lot of other firms felt, was there was still more to come," he said.
With $12,500 the standard pay for a summer internship at companies like Lehman, Merrill Lynch and Citigroup — often capped off with a post-graduation job offer — the competition for these positions can best be described as fierce.
Until Monday, Lehman, the 158-year-old bank with a reputation as one of Wall Street’s small but elite power players, was one of the most sought-after employers among students, according to another U of M senior Neal Bhagat.
"They’re a very prestigious bank … I know a few people who took Lehman offers over other banks because of its reputation," he said.
The Michigan Daily contributed to this report.
