Downturn halts students en route to Wall Street

When James An ’08 began spring break, everything was going according to plan. He was almost finished with his senior thesis and already had a job lined up for next year: a position as a first-year analyst in the fixed income division at Bear Stearns.

On a retreat for Manna Christian Fellowship with his friends, An heard the news. Bear Stearns, enduring a run on the bank and pushed to the brink of bankruptcy, was being acquired by JPMorgan Chase for $2 a share. “It was definitely a shock,” An said.

Former Bear employees may learn this week whether they still have jobs with JPMorgan, The New York Times reported Monday. An has not yet heard if his contract will be honored by Bear Stearns.

The recent economic slowdown has caused considerable anxiety for students seeking jobs in finance. While few seniors are losing jobs they had already accepted, juniors faced stiffer competition for internships this summer and may have difficulty entering the industry next year. The tightening of the job market has complicated the stereotypically Princeton pursuit of finance, and as a result, some students are reassessing their futures.

An’s story is a cautionary tale. A computer science major also pursuing a certificate in teacher preparation, An interned at Bear for every summer of college. This past summer, though, he watched as two prominent Bear funds collapsed in July, sending ripples of panic through the company.

“It was the start of the whole crisis, and people didn’t know how bad it was going to get,” An said. “It was shocking to see our name on the front page every day.”

Though the summer bankruptcies rocked the boat at Bear, no one thought they would lead the company to capsize. “They had weathered the storm in the past, so I didn’t think about it too much,” An said. When he was offered a full-time position at Bear for after college, An did not hesitate to accept.

With the news of Bear’s bailout in March, though, everything changed. “I was 60 percent sure my contract would be honored by JP Morgan,” An said. Nevertheless, he began filling out applications for new jobs. As the formal recruiting season for jobs in finance had ended, An began to look for employment elsewhere.

“I took it as an opportunity to explore other industries,” he said.

An eventually found and accepted a job in consulting. “It was somewhat of a blessing because it gave me an opportunity to think about what I was really interested in,” he said.

An is not the only student reassessing his career goals after a challenging application season. The most common path to a post-graduate career in finance is through a junior year summer internship.

In a bull market, most interns are extended an offer to return to the company after they graduate; now, however, juniors who have not secured internships for this summer will find it difficult to secure a full-time offer next fall.

Many seniors, however, feel that securing a position this year was already much harder than in previous years.

Last year, “it seemed everyone was going to get a job at these banks,” said Sean Leimbach ’08, who will begin a position as a first-year analyst in capital markets at Lehman Brothers after graduation. “But as they started applying, [the investment banks] only took a small number of kids.”

And a job in finance is as coveted as ever.

The number of students interviewed for finance positions increased this year by 10 percent, Career Services Director Beverly Hamilton-Chandler said in an e-mail. She noted that she is not able to judge whether the number of offers extended has decreased this year, as students are not obligated to inform Career Services when they accept a job.

This past interview season, as suit-clad students flocked to the Nassau Inn for interviews, a sense of panic descended. With rumors circulating of record-low offer rates, the atmosphere was especially tense. “People freak out about job interviews,” Zach Kurz ’08 said, adding that “people stress about their jobs much more than they stress about their theses.”

And even among those students lucky enough to secure a job in finance for the summer or next year, there is a general wariness about current market conditions. Kurz, for example, who will begin a position as a first-year analyst in mergers and acquisitions at Morgan Stanley after graduation, said he will proceed with caution.

“I’m definitely going to take the GMAT now,” Kurz said. “Originally, I thought no business school, but maybe it’s not the worst thing in the world.”

Others, like Leimbach, are firmly set on their careers. “I can’t think of anything I want to do more than this,” he said of his job in the finance, “even if [the economy] is on the downturn.”

Today’s seniors, next year’s first-year analysts, seem to have dodged a bullet. It is the people with more experience who are getting laid off, explained a managing director at a leading investment bank. The employee’s name is being withheld, as he is not authorized to speak to the press.

These “more expensive” employees are feeling the effects of the crisis, leaving college graduates safe from larger cuts — at least for now.

After seniors land jobs on Wall Street and begin as first-year analysts, though, current market conditions may significantly vary the kind of work they do. The downturn has diminished the number of deals handled by major banks. This low rate of “deal flow” may cause analysts to spend more time focusing on clients.

As a result of the current conditions, students pursuing the traditional Princeton-to-Wall Street transition are taking some time to stop and think.

“My perspective has definitely changed about the future,” An said. “You receive an offer, and you just expect that you have a job. I learned how fast everything can change. Things can happen really quickly, and you can find yourself out in the open again.”