Wall Street-Bound Graduates Watch, Wait and Worry

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At business schools, nail-biting has become a career strategy.

As the turmoil on Wall Street continues, M.B.A. students are nervously watching and waiting, hopeful that the jobs they found last fall will still be there a few months from now.

“Positive thinking, positive thinking, that’s what I tell myself,” said Matt Fink, 25, in his first year at Columbia Business School and a summer intern-to-be at a major bank. “You hear Bank of America, Citigroup, Merrill, Lehman, Bear. Every day, one of them is the lead story in the news. And that’s where many of us have jobs. You just have to hope for the best.”

Since June, Wall Street banks have disclosed more than 30,000 job cuts, and more are expected. It is unclear whether these cuts will include the thousands of students that firms have already hired from colleges and business schools. The anxiety increased last month when Bear Stearns collapsed, prompting scores of students on spring break to call their career offices to check on the status of their jobs.

The jitters extend beyond the business-school set. Steve Fraser, author of the new book “Wall Street: America’s Dream Palace,” said he had noticed rising fear among undergraduates in his Wall Street seminar at the University of Pennsylvania.

In the beginning of the semester, Mr. Fraser noticed that students seemed to think the housing crisis was unrelated to their goals in finance and was caused mostly by irresponsible borrowers. But after the collapse of Bear Sterns, he said, they had “a great deal more sympathy for people who have already been affected by this crisis.

“There’s a sense in the class now that things are more worrying, that this may affect them.”

The situation today is not nearly as dire as it was during the 2001 recession — yet. But even students at the most elite business schools are concerned that conditions on Wall Street will worsen, pulling their jobs into the claws of the credit crunch.

Christopher Sanger, 28, was a senior at the University of Notre Dame in 2002. At the time, he said, many of his friends had signed job offers that were then taken away. Now a second-year M.B.A. student at the Yale School of Management, Mr. Sanger said he thought that his position at Merrill Lynch would be secure because it was in investment banking, not trading.

Goldman Sachs, Merrill Lynch, Citigroup, Bank of America and Lehman Brothers said they did not plan to change their internships and job offers. A spokesman for JPMorgan Chase, which is acquiring Bear Stearns, said the bank would honor its own hiring commitments, but the spokesman would not comment on how JPMorgan planned to handle internships and job offers made by Bear Stearns.

Many students have been uneasy since July, when the credit markets first seized up. “When the class of ’09 entered business school last fall, they had spent the summer listening to the subprime mortgage news, so they came in saying, Wow, have I made the right decision?” said Roxanne Hori, director of career management at the Kellogg School.

Even so, business school administrators said that hiring this year — which was mainly completed in the fall — remained strong. Career counselors said that not a single bank had reneged on its offers and that bank recruiters had said they did not plan to do so, either. “So far, we’re tracking well compared to last year,” Ms. Hori said.

Career advisers at universities say that in the downturn of 2001 and 2002 the banks were not the main employers to rescind offers. Several technology companies, including Nortel Networks and Cisco Systems, changed their minds on offers, and consulting firms like PricewaterhouseCoopers and Booz Allen Hamilton delayed students’ start dates to save money. Intel offered students the option of a “reverse signing bonus”: they could have two months’ pay and could keep their signing bonus in exchange for giving up their jobs.

But the effects were also felt at financial firms. Credit Suisse offered students a chance to take off a year before starting, in exchange for $20,000. Mercer management consulting and Charles Schwab canceled summer internships altogether.

In that downturn, financial firms focused on laying off thousands of workers, many of whom had been out of college or business school for only a year or two.

Many young graduates with M.B.A.’s worry that history will repeat itself. In the last month, the alumni career center at the Leonard N. Stern School of Business at New York University has been getting worried calls from recent graduates concerned that they will be laid off, said Pamela Mittman, assistant dean of career services and student activities at Stern.

If companies decide to lay off employees who are one or two years in, rather than lay off the cheaper new recruits, business school administrators said that decision could hurt the companies’ reputations. For example, the M.I.T. Sloan School of Management set up a limited-access Web site to record which firms had laid off recent graduates in the last decline. That way, future students could look at employers’ actions before accepting job offers, even in good economic years.

http://dealbook.blogs.nytimes.com/2008/04/...wait-and-worry/