The past few months have made me acutely aware of the fact that the financial industry (especially the banks) is in bad shape. Be it the scarce numbers (of banks) that turned up on campus for recruiting or the small numbers that were called in for interviewing, everything points towards a gloomy picture. It was only last year when there seemed to be opportunities aplenty, but things have changed pretty quickly.
In the course of my interviews over the past few months, ive had almost every interviewer asking me what i think of the current state of the economy (almost as much as ive been asked volatility smiles!). And ive had a multitude of reactions to my answer to this question. The responses have ranged from “Its not that bad, look at the strong fundamentals” to “The fed needs to cut another 100 bps and the crisis is much deeper than people are thinking” to “This is the worst since the great depression!”. The thing that strikes me about this is the amount of uncertainty that prevails. Nobody seems to have a definite answer. I think THAT is most worrying.
The tragedy for students graduating now has been the fact that most of the investment banking jobs after a Financial engineering degree have typically been on the Fixed Income side. And it is Fixed Income divisions that are the hardest hit, thus making it impossible for them to hire right now. I have seen a number of extremely smart people not getting offers simply because the firms do not have a clear idea of what kind of a headcount they will need in the coming year.
The bright side is that there have also been efforts rectify the situation. A lot has been said and written about the M-LEC (Master – liquidity enhancing conduit) being funded by Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, who have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. Another course of action seems to be a freeze on interest rates on ARM’s (Adjustable Rate Mortgages) in a bid to keep delinquencies under control.
Given the volatile markets, It is expected that this coming January might see a lot of turnover. For the sake of many many students who are here on big loans and have worked hard in getting their degrees over the past two years, i hope and wish that the New Year brings better opportunities for everyone.
