September 21, 2007

Staff Cuts at Investment Banks May Affect Jobs for C.U. Seniors

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Wearing their ties, high heels and power-suits, Cornell students interested in finance careers or investment banking are heading to recruiting activities in Barnes Hall and various other locations throughout campus, yet many will find the competition fiercer than they might have expected. According to, the financial industry has already made 75 percent more job cuts this year than in all of 2006 combined — an indication that large employers of Cornell undergrads, like Lehman Brothers and Goldman Sachs, may be cutting back on their number of hires this year.
“The impact for Cornell is going to be severe and widespread. A lot of companies are going through the motions. While they show up, they have no intention of employing,” said Prof. Charles Chang, finance.
According to the 2006 Postgraduate Report released by Career Services, around 40 percent of employed graduates go into financial services. Of the top 10 most popular employers hiring Cornell undergrads, six are financial services firms or investment banks, such as J.P. Morgan Chase & Co., Goldman Sachs & Co., Morgan Stanley and Lehman Brothers.
A press release from Lehman Brothers earlier this month stated, “The Firm will be rescaling its operations in the U.S. and U.K. due to market conditions” and announced 850 job cuts. The investment banking firm is just one of many to adopt a conservative approach in hiring this year, according to Andrea Vidler ’07, a masters student in the Cornell Institute of Public Affairs and president of Delta Sigma Pi business fraternity.
“Goldman Sachs, for example, seems to want to decrease the pool of incoming employees instead of firing the people they have — they staff very leanly to make sure they don’t have to fire,” said Vidler, who has worked for Goldman Sachs the past two summers.
She said that at the beginning of this summer, the company mentioned it had full-time positions to match all of its interns, yet by the end of the summer, there were fewer offers.
Chang echoed Vidler’s sentiments with regard to recruiting for financial services at Cornell this fall. “Hiring is very poor this year. There are less than half the offers going up than last year. The amount of callbacks is lower — last year maybe 8 out of 10 interns at a company would get hired. This year it will be more like 4 out of 10,” Chang said.
Rebecca Sparrow, director of Cornell Career Services, remained skeptical about what the big banks will do.
“It’s really hard to know at this point what the effects of the market will be on hiring. We are seeing some of the on-campus recruiting reserve dates being reduced. For example, a company that called last spring to reserve seven rooms now only wants five,” Sparrow said.
She guessed that the decrease might be due to students accepting full-time offers due to internships, which could lead to weakened recruiting efforts by financial services firms.
“There’s always room at a bank for talent, and Wall Street firms can’t afford to miss out on students with enormous long-term potential. I don’t think banks know for sure at this point how hiring will be effected,” said Prof. Mark Zurack, Finance, who worked for 18 years at Goldman Sachs and founded the firm’s Equity Derivatives and Research group.
Students who hit the streets of Manhattan this summer and worked in financial services or investment banking internships seem to have cause for concern, however.
“If you didn’t have a job this summer, it’s really hard to find one — I don’t want to be you right now,” said Kur Robin, Econ, ’08. “They’re not just hiring full time … it wasn’t this way in the spring. They were hiring people and it was great — in the summer the market shut down and they stopped hiring,” Robin said. He received an offer from Deutsche Bank, where he interned at last summer.
“The last day this summer at work [the interns] were all hoping the market would go up so they’d be in a good mood when they were giving out offers. It had done badly the day before; there were a lot of people getting fired that Friday,” Robin said.
Chang blames the job cuts and decrease in hiring for the financial services and investment banking on the poor market this summer, as well as the tendency of firms in the industry to overpay.
“It’s just not sustainable. When you pay a 21-year-old kid, the cheapest employee you have, 100 to 120 grand right out of college, it doesn’t take long before you run out of money,” Chang said. He noted the increased popularity of finance at Cornell over the past few years, and said the University has shifted its curriculum to accommodate students’ interests.
“Where firms are going to cut jobs is from places like Cornell, that have only recently developed recruiting bonds. We’re in that second pecking group behind Wharton, Stanford and Harvard. We’re a million times better than places like Penn State, though,” Chang said.