The day after Lehman Brothers filed for Chapter 11 bankruptcy protection and the Dow Jones Industrial Average fell by more than 500 points, concerned students crammed a University of Pennsylvania auditorium to hear some of the Wharton School’s leading professors discuss the long-term impact of the recent shakeups on Wall Street.
“I think it’s worth going over a few numbers just to understand how we got in a situation so dire that a couple of firms that survived the Great Depression couldn’t survive a credit crisis and a housing market collapse,” lectured Joseph Gyourko, Wharton professor of real estate and finance, noting that most people would likely consider the 1929 stock market crash a much greater disaster than the present situation.
Though some students were concerned about just how American financial markets fell into such a state of turmoil, more worried about their potentially diminished job prospects after graduating from one of the country's top business schools. Wharton, Columbia and other top-ranked business schools have often been key feeders for leading financial institutions such as Lehman and Merrill Lynch. Some market watchers anticipate that the recent upheaval on Wall Street might adversely affect these traditionally highly rated and prestigious institutions most. Forecasts for the future of the financial services job market were mixed at the “teach-in” with most advocating a cautious wait-and-see approach. At least one professor, however, was optimistic.
“We‘re doing the type of reorganization that is necessary, and we’re going to get healthier as a result of this,” said Jeremy Seigel, Wharton professor of finance, to some applause. “These financial service jobs are going to grow.”
The previous day, another top business school known for its close ties to Wall Street hosted a similar event. Fresh off the bankruptcy news about Lehman and the weekend announcement that Merrill Lynch was to be acquired by Bank of America, the Columbia Business School held its annual presentation “A Day in the Life of an Investment Bank.” Regina Resnick, managing director of the business school’s career management center, said she was surprised that 20 of the 21 investment banks invited to speak that evening came on such a tumultuous day. Only the representatives from Lehman did not appear. For a purely educational event without formal recruitment, she said this was quite a showing. Though Resnick called the timing of the event “a little bit dubious” – it had been scheduled for weeks -- she said the event was a “great learning experience” for student job seekers.
In the past week, some business school professors have only had to look as far as the day’s front-page headlines to find teachable moments. David Beim, Columbia professor of professional practice, said he has been departing from his syllabus frequently. He added that he often has to force himself to instruct the material he has scheduled in spite of immense student interest in the current financial crisis, his personal take on it and any historical perspective.
“I just rip and read from the newspapers,” said Beim of his pre-class lectures on current events, especially after last week’s announcement that the Federal Reserve would rescue the American International Group. “I never thought I’d live to see the day that the U.S. government would take over the world’s largest insurance company. I tell my students, when you’re in a boom and people are throwing money in the air, that they should learn to step back and get some perspective. If it sounds too good to be true, it probably is. I compare it to recreational drugs. It’s dangerous for you. You have to learn to just say no.”
In addition to working the day’s financial headlines into his curriculum, Beim said he has also been recommending that his students read a number of 19th century works on economic bubbles and the herd mentality. He added that works such as Charles Mackay’s “Extraordinary Popular Delusions and the Madness of Crowds” illustrate the continuity of today’s financial difficulties and the irrationality of man throughout the history of the marketplace. Beim said that giving career counseling and advice to students is an ever-present part of his job, particularly in this uneasy market.
Some business school students are even taking the news of financial hardships in stride, remarking on their excitement to be in the classroom at a time when there is much to learn from the successes and failures of others.
“I think the general feeling on campus is not what many would expect,” said Rohit Chopra, second-year MBA student at Wharton. “There is not a feeling of doom and gloom but a feeling of cautious optimism. I’m happy to be at an institution like this at a time like this. The conversations have been really rich in the classroom. From a learning point of view, I think I understand better what the options are on the table, why this is happening and what the implications are for the future.”
Rohit, who is the career development chair for a student-led career advisory board, said his organization and the school’s career management office have been instrumental in responding to the recent concerns of job-seeking students. Recognizing the slowdown of American markets, he said, the school has put more of a focus on programming for those seeking jobs in emerging financial markets around the world. In addition to the broadened international focus of career services, Rohit said, students interested in traditional fields, such as investment banking, are now broadening their career searches.
“There will be some jobs on Wall Street,” said Patricia Rose, director of career services at Pennsylvania who also works with Wharton undergraduates. “It’s not as if financial services are going to turn their backs on graduates. Still, if students feel that they want to work in financial services, we inform them that there are a range of opportunities. Clearly, we’ve been saying that fewer people will be hired on Wall Street this year. We think they should explore other options.”
About 30 percent of Pennsylvania undergraduates -- not just those enrolled in Wharton -- take jobs on Wall Street each year, Rose said, noting that a large number of those students work for large commercial and investment banks. She added that career services has been especially counseling seniors, many of whom returned to college this fall with job offers from financial organizations after interning for the summer. Many of these students, she said, are concerned about accepting offers from companies they see in a state of flux. Recently, a number of financial services groups have cut back their recruiting schedules at Wharton, Rose said.
At the Columbia Business School -- where greater than 50 percent of its 2007 graduating class went to work in the financial services sector – the career management center is taking the same one-on-one approach to student counseling. Special consideration and attention is being given to students who had either held summer internships at or received job offers from Lehman and Merrill Lynch, Resnick said. In 2007, Lehman was both one of the top employers and internship providers at the school, with 13 and 22 recruits respectively. Merrill Lynch also hired 14 2007 graduates and hosted 17 interns. Both companies are also among the school’s top corporate partners. Resnick said she has been answering a number of questions from students concerned about the marketplace and the certainty of their job offers. In addition, she said, her office also has meetings scheduled with the investment banking and sales and trading clubs in which it will outline viable alternatives to careers in those respective fields.
Most of the career service programs at the institution, however, have not been affected by the recent market chaos.
“The fundamentals of career management don’t change with the market,” said Resnick, noting that skills like interviewing well and crafting an excellent resume do not go out of style. “We offer a thoughtful approach to all of the good principles we’ve been working with students to apply. I remain guardedly optimistic.”
Both Wharton and the Columbia Business Schools have extended some of the career service resources available to current students to recent alumni, some of whom may have only been working at troubled financial institutions for a matter of months. It is in the best interest of the institutions, officials from both programs say, to ensure that alumni are given proper counseling and assistance as needed.
“This is probably the most amazing week that I have seen in my 25 years in this business,” Rose said. “That said, we’ve seen all kinds of things. We’ve seen companies acquired and companies go bankrupt. Still, to have so many things affect students and alumni is unprecedented. I think we all hope the economy improves."
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