Further Proof That Nothing Has Changed

Overheard on the streets of New Haven, just ten minutes ago:

Two young women, almost certainly Yale undergraduates, are walking down York Street, discussing their efforts to get jobs as bankers.

Student #1: “Why does everyone want to go into banking?” [Note: When an Ivy League undergrad says “banking,” he or she invariably means “investment banking,” meaning underwriting or trading.]

Student #2: “We should advertise – ‘Being a lawyer is so much better than banking.'”

Student #1 (after a pause): “Seriously, everyone wants to go into banking.”

End scene.

Also further proof that no one does campus recruiting better than a Wall Street investment bank. Or do undergrads these days want to work in investment banking after the financial crisis? At least, after the last twelve months, no one can claim that he didn’t know what kind of business he was getting into.

Update: I edited out a crack I made that, on reflection, was gratuitous. I’ll let the rest speak for itself.

By James Kwak

54 responses to “Further Proof That Nothing Has Changed

  1. Don’t worry; the industry will chew them up and spit them out soon enough.

    Two young women, but three students – perhaps you should go into banking :)

  2. Well, I am not sure having our best and brightest become lawyers really helps our society very much, either.

    Doesn’t anybody believe in doing actual work anymore?

  3. That’s for the robots and poors.

  4. “do undergrads these days want to work in industries that are best known for torpedoing the entire economy through a combination of greed and incompetence (and abusing their customers along the way)?”

    James – do you really think most intelligent and informed people agree with what is written on this blog? The vast majority of the people that read this blog are already predisposed to your point of view. Thus the majority of the commentary is also pointed in your favor.
    Perhaps “most undergrads” have a better understanding of the role of all the players in this crisis and also realize that there are indeed reasons to pursue a career in banking which don’t need to be defended. I doubt that most undergrads would agree with the one-sided and underinformed postings on this blog.

  5. Sorry, typo – now fixed.

  6. That scene was “Pinteresque”

  7. “Perhaps “most undergrads” have a better understanding of the role of all the players in this crisis”

    Certainly they do. They see no consequences, full pay, big bonuses, government guarantees of banker’s positions, a powerful lobby that has bought Washington – as it should have, that’s what it was paid to do – hell, I’m going into banking myself!

  8. Wait, did I make up all that outrage against the banking industry earlier this year?

    No. Gallup has banking coming in 21st out of 25 industries – behind the federal government, pharma, electric and gas utilities, and airlines (but ahead of lawyers and real estate).

  9. Does anyone remember the Seinfeld episode where Newman is trying to get out of the ticket??? He questions Kramer on the witness stand?? I’m so tempted to post it here, but I guess it would be taken down for the copyrights. You can probably hunt it down on youtube.

  10. Answering 2 Banker

    Ok Banker You Have a point: a career in banking don´t need to be defended. You´re very clever. As every other banker in the world. But, as many other bankers, you don´t understand a single word about the things you read. When the undergrads of this country and everywhere in the world think their future is better as lawyers than bankers, the entire banking sector is doomed. And, If I were you, I´d ask myself a simple question: Why everybody is attacking the banking sector/career? Don´t you see around you the huge damage the banking sector has done to everyone even the undestructible US government? What is going to happen to all the people here, there, everywhere that has lost their jobs, because of the greed of the banking sector? To their families and their future? Don´t you think the attacks are absolutely justified? Maybe you´ll have to start using your brain Banker.

  11. Banker – Are you implying the readers of this blog have no intellectual ability (or whatsoever) to form their own opinions, but to generally accept James’ view?

  12. Harminder Singh

    What’s with the anger, man? Feeling slighted?

    What you term “one-sided and underinformed postings” are actually part of the mainstream conversation on this topic.

    Plus, James was talking about investment banking specifically, not banking in general, which is what you alluded to here: “there are indeed reasons to pursue a career in banking which don’t need to be defended”

  13. Not sure what planet you’re living on “Banker!!!”, but even the Republicans I know hate the bankers right now. They may see them as a necessary evil, but your post is clearly far more out of touch than anything Kwak has written.

    Sorry, no one likes bankers right now, particularly investment bankers. But I’ll take a guess that you are in fact a banker, and thus may be hanging out with a different crowd.

    That aside, I find it sad people aren’t asking, “What sounds most interesting?” or “What can do the most good for the world?” My guess is very few get up in the morning and say, “When I grow up I want to be a banker!” A lawyer I suppose, but sadly it sounds like it was about money, not passion.

  14. Seems James’ math is better than the answer the Quants got on the financial derivatives formulas.

  15. The reason undergrads want to go into banking is for two simple reasons:

    1) Expected pay is much higher than other industries.
    2) That same arrogant culture that makes average Americans hate bankers, makes students from elite schools feel special by joining it.

  16. The Wall St. bankers should be put in jail and then daily buttreamed for the misery and suffering that they have inflicted on the American people.
    Oh, and after the daily buttreaming, they should be made to eat a daily share of their ill gotten bonuses, broken down into one dollar bills and shoved down their despicable throats.

  17. “Or do undergrads these days want to work in industries that are best known for torpedoing the entire economy through a combination of greed and incompetence (and abusing their customers along the way)?”

    The most succinct description of the cause of the “financial crisis” that I’ve seen.

    Sorry banker. You’ve seemed to have lost touch with reality. Like most of the other bankers, Bernanke, Geithner, Summers, et al. Have you looked at the unemployment data lately? Probably no big problem for you as the “bankers” are making record profits. What would do if you became unemployed? We can only hope.

  18. Recovering Ivy-Leaguer

    Yale undergrads studied harder than their classmates in highschool and got high SAT scores, leading some of them to start believing in their extraordinaryness and producing a kind of overweaning arrogance and elitism. This is also true at Harvard and Princeton among other places, and true for at least 50% of the people there in varying degrees.

    The disdain they shower on anyone who doesn’t have their same ivy-league affiliation (even if these other people scored higher on the SAT than them, study harder, have higher IQs, or are extraordinary in other ways) is ubiquitous. They see you and all “common people” as inferiors.

    Given their attitudes, it would be truly surprising if they didn’t want to become bankers.

  19. No banker!!!, they will agree with you, simply because you are a banker!!! and you said so. Kissing banker-$$$ is their specialty.

  20. Why work when you could get corporate welfare instead?

  21. Plebeianswillrevolt

    one day…. it will be a great day too. I cannot beileve that the abuse will continue. Obama, the freshman, could read a powerful speech. Why not, do you know how much the American taxpayers oay for that White House Speechwriting staff. A veritable paper mill. And it is worth the OfficeMax it is printed on. So what, let it fester, in fact, the more Omabby prevaricates, the greater the backlash pressure builds. I really don’t think those two Yale brats will be around Citi long enough to pay off their student loans. Works for now, but this is not going to be allowed to continue.

    Obama, ….. naw, I won’t write it, but your wife is doing wonders for the fashion industry.

  22. We are at the heart of the problem here. And it’s even worse than what James Kwak described. Even people who don’t want to work in finance have to, because they can’t find anything else.

    I know several Physics graduates who work in finance. They dislike finance. They would rather work in science and engineering even at a lower salary. They just can’t find any work there.

    It sounds crazy but try this:
    Go to this website:
    http://www.phds.org/

    Look for a job (blue square in the middle) using the following fields:
    PhD Field: Physical sciences/Math
    Sector: All Sectors
    Type: Employee
    Location: All locations
    Keywords: All keywords

    Push the search button.

    Do you see any science jobs?

  23. It’s not like the general opinion of lawyers has stopped reasonable people from leaving a productive startup and pursuing a law degree…

    ;-)

    Cheers,
    Carson

  24. There’s always work in the military building better weapons. Most physicists DO work for the military.
    Mathy people can work on breaking codes (spying), or operations research (making sure the military supply lines work).
    Finance does pay better though.

  25. Also, if you insist on doing something productive, you can always reclaim your outsourced job in the third world at third-world pay and conditions.

  26. I for one didn’t have any faith in the law until Jay Bybee was made a Federal Appeals court judge–no doubt for his enormous contributions to mankind.

  27. Who’s keeping you employed anyway? I can assure you it’s not the bankers. They’re too busy keeping themselves employed.

    How about the people who produce all your food, clothing, shelter, transportation, energy & health care? Think any of them could use a bailout?

    And what do the bankers produce? Nothing.

  28. In the words of the immortal Bugs Bunny “If you can’t beat’em, join’em”.

  29. It’s to bad, bankers and wall-street sharks , the best our universities can produce “MADE IN AMERICA”. Yep, from Harvard to Standford. Go forth into America and prosper and remember: “The one that wins the most toys WINS!” Now they walk amongst us with eyes of death. Just look at a shark and try to find life in its eyes, you won’t find it. I don’t know about you people out there but I’m gonna go back and re-read “The Origins of Species” by Darwin. Me thinks I see what he means. lol

  30. the reason why they want to go into banking is simple: unless you are an engineering major you can not make even close to the same money anywhere else straight out of school. we are talking 50%+ differences in salary here.

    another reason may be that they are readers of this blog, realize what looting is going on, and want to be a part.

    and as a side point, it seems like you totally misunderstand what these women are saying. this scene reads like two prelaw undergrads who run a prelaw organization on campus. either that or you did a poor job explaining the background.

    they are bemoaning why all their friends only want to go into banking.

  31. This is yet another commentary on the abdication of America’s “institutions of higher learning”.

    Elite universities themselves are by now primarily sociopathic rent-seeking bloat-bags.

    Just look at the social and moral caliber of what they’ve been turning out for the last several decades, and how they haven’t changed any more than their bankster masters have.

    Oh, sure, Harvard will make a big fuss about adding an “ethics” requirement to its business curriculum, and I imagine this Yale does something similar, but that’s just a joke. The same anemic “reform” scam.

    I know this post is just an anecdote, but I’d be willing to bet on how the data will turn out at least over the next few years (while the bogus “recovery” still seems to be happening).

  32. get your fingernails dirty?
    let muscles evolve unsupervised by a personal trainer?
    smell of the stuff you work with?
    look at what you’ve accomplished during the day and enjoy feeling satisfied and proud of yourself?
    how truly revolting ;-((

  33. unfortunately it’s either high tech or lots of soldiers (who are sons and daughters btw) – and if that’s the choice then I am selfish enough to want my side to suffer as few casualties as possible

    – it took me years of reading to finally accept that you can’t be a wealthy country without protecting your borders from those trying to push in

    – probably “attack is the best defense” is too extreme a concept but an outward push is probably better for your own people than defending against attacks as of course is paying tribute what we now call “foreign aid”

    – unless of course you are Europe and posture as a tribute ooops foreign aid paying peace champion/peace expert while enjoying the American umbrella

  34. “the reason why they want to go into banking is simple: unless you are an engineering major you can not make even close to the same money anywhere else straight out of school. we are talking 50%+ differences in salary here.”

    It’s not the “pay straight out of school” that attracts people to banking, it’s the near limitless pay that once can potentially make 10 years down the road. Law and Consulting used to have a similar pull – work your ass off for a decade, become a partner, make millions, but those opportunities are nowhere near what they used to be. Banking remains the only “career” where a new grad from a top school can reasonably expect to make seven figures in the not too distant future (without the potential personal bankruptcy that being an entrepreneur holds or the next to impossible task of becoming a C-level at a Fortune 100 co).

  35. because that is where the rents are, of course.

  36. I remember back in the 80s being horrified at how many of my Ivy League friends went into investment banking, and almost none of those people are in “banking” now.

    I find that the Ivy League types who want to go into “banking” are the least imaginative of their peers. I don’t understand the constant refrain of “the best and brightest” going to Wall Street.

  37. This should come as no surprise.

    Your wealth is directly correlated with your proximity to the credit spigot. The closer you are, the richer you become. Our smartest students, even if they don’t understand why, can see this clearly.

    There is no money in molecular biology or cardiology. In a credit based monetary order, the easy money is in creating credit.

    Turn it off.

  38. You don’t need to convince me Silke. I’m one who sees clearly the important difference between being able to destroy the world with nuclear weapons 1,231 times over, and 1,233 times over.

  39. Another reason they want to go into banking is that it’s so damn easy to do. Law school means 3 more years of studying. Wall Street jobs practially fall on their lap.

  40. Smart undergratuates go into law (or banking) because

    1. They think it is important
    2. They think it will be interesting
    3. They think they are different
    4. They think public outrage is exaggerated
    5. They think they will come out on top
    6. They don’t know how anything real works and what else can they do except what they have been doing so far: make people think they are smarter than they are?

    For 5% it will be a fine career choice. For the rest, they will at least learn you cannot trust anyone in authority or believe anything anyone ever says without scrupulous regard to how he is being rewarded for saying it.

    This is useful in alternative employments: telephone sales, crime, politics, public relations, advertising, entertainment. It is also essential to understanding mainstream economics.

  41. that comment is unfair and you know it – peace?!?!?!

  42. I have seen this phenomenon with my own eyes, as the mother of two sons, one just out of college, another preparing for it. It’s frightening to behold. Our best universities should be held accountable for the Frankensteins they nurture.

  43. Where is law/banking are high paying? How about why people leave fields like engineering or medicine and go into law/banking? 1 & 2 are contraindicated.

  44. Sorry Silke. I just wanted to emphasize the difference between being primus inter pares and going totally overboard with the dominance to the detriment of everything else.

  45. Criticism of “banks” is from envy of the outsiders for what these outsiders see as a privileged group swimming in “syrup and butter”.

    Well guys, that’s how the world works. Banks “make” money and “bankers” are human and as every human they will deal themselves a better share of what they make. If you were a potter, wouldn’t you make better pots for yourself; or if you were a furniture maker, wouldn’t you make better furniture for yourself. You have most of what you make, and they happen to make money.

  46. Yakkis
    primus inter pares is a dream that has to my knowledge never become true – I understand the yearning for it and I suffer from it as well but it seems to be an impossibility – nowadays they tell us the European Union will be the model for it – I hope for it of course but I don’t buy it

    how much dominance is enough dominance – it seems to me that over the millenia very very few rulers have been able to figure that out most had to contend themselves with either projecting too much or too little of it

    and btw I remember the time when the Americans over here were not ashamed to show their superiority and I’d guess there was not more anti-Americanism than there is today probably less – one of my pet theories/fantasies is that the Iraqis only became rebellious when they found out that the Americans really didn’t want to occupy the country permanently – after all they must be smart enough to know how well Japan and we did under American occupation and believe me, even today I insist there is quite a difference between your “zone” and the British – living next to you has done us a whole lot of good even though you tended to consider us to be quite often at least slightly retarded (some of us hit back by claiming cultural superiority which I much to my chagrin found out to be not true)

  47. Oh, do crack, do.

    If we are going to proceed according to “how the world works”, as ‘biofuel’ puts it, then we should draw and quarter the “bankers”, cast their innards to tell fortunes, and turn over their wealth as tribute to whomever enjoys the greatest power.

    But I thought we were trying to progress beyond the Hobbesian state of nature.

  48. Farfetched is Now Reality; We Need To Push Banking Reforms…

    Follow up comments to original post as tribute to Mr. Simon Johnson and his cause to keep all informed:

    This post has been front page since Friday on a building of Farfetched theme. I hope all will learn and appreciate the need for you folks and Mr. Johnson, with a big thank you from this Business Major in finance. I am not one to join the ranks yet until we upright the ship correctly…

    Here is the latest post as can be read on all the major sites of Wallstreet Journal, Investors Business Daily and CNBC. This post started out due to school and a friend losing their home and job. Hit very close to home. The truth is critical for all to understand and become able to spread the word “No More” to the ones that can make change and fix this mess before it imploads.

    The ability to understand the cost of economic recovery on the backs of the American Taxpayer has become blurred at best. The special interview on PBS had truly revealed the need for sweeping reforms. These reforms are critical to preserve the original separation of what banks are allowed to conduct as business practices. We cannot tolerate for one moment, when it comes to the likes of any financial Bank of Goldman Sachs, Bank of America, JP Morgan, Citicorp, Wells Fargo and a host of others, taking at the current Federal Rates, and use these fund rates against the American Taxpayer. These dollars of being scalped by the current non-regulated reform of the banking and financial entities; have created a vehicle for them to make investments in other countries. The irony of it all as they chose to not even invest within the building of our own country prospective recovery. All these comments are based upon the bank’s ability to use the arbitrage spread of what these financial institutions barrow from the Federal Reserve Current Rate, but as actually wear two or three hats to turn around as an investment brokerage model to be alive and well. The fact of these other hats these banks are currently allowed to wear, without serious banking reforms, has placed even a greater chance for an extreme economic collapse and a depression greater than any ever imagined.

    The original collapse that had caused so much pain seen throughout the world and our own United States was on the backs of institutions making very bad investments and as in prior times we bailed out these same banks with about $145 billion and will make the final payment on this in the year 2013. Now we have bailed them out with over trillions of dollars with these same banks showing no respect and battle reforms that would take away their power and make them responsible to be either banks or investment financial firms. They cannot were two or three hats but one would be the needed reform.

    Listen and review the video that is a revelation and a call for change and reform. It also puts a face on the current administrations lack of an ability to make critical changes. The following sites are paramount for you to learn the plight of every American is facing. We are facing the pompous attitudes of a banking industry having no mission to assist the failing unemployed or foreclosure based upon the very nature of the mistakes made by the bailed out financial sector. These same financial sectors are drooling at the opportunity to devour their original prey of the planned defaults they calculated, as they would buy back at such depressed rates. This is the SIN against God and Country! We cannot allow this to be business as usual and hold the Government through the Congress, Senate, and Presidential Administration and President Barak Obama accountable to reform this failed system. Taking money off the table until a true honest review of the following videos is critical to the wellbeing of intuitional investor and the private.

    Get to know the name of Simon Johnson and his website at https://baselinescenario.com/

    Watch the PBS special report to see why these views hold significant water for us to throw up our arms and say stop this crazy madness. Go to the following web link:

    PBS channel under Bill Moyers “America’s Economy reformed”? http://video.pbs.org/video/1290388692

    Wallstreet Journal Speed-dial Leaves Many Questions after Bill Moyers Guests…

    http://online.wsj.com/video/pm-report-geithner-talks-most-to-goldman/0CF0CAE9-2213-46BA-B2FC-8657C3AB10A8.html

    It is time we got Ethics and Morals in Order and Not What the Financial Banks Think as Business as seen possibly in this Dilbert video…

    We need to become sellers into this current earnings season of the Financial Banking Sector and send the message that real reforms are forthcoming. It was interesting to see the whisper numbers elevated on the bases that if they miss these whisper numbers, they are considered missing on their earnings. This has become known based upon the unveiling of this huge disparity of analysts not seeing the original spreads of these banks earnings based upon the references above.

    Thank you for the use of this forum as our professor tracks all our efforts to uncover micro-macro changes that effect us all.

    James Gornick

  49. No, you don’t get it. It’s Hobbes only from the top down, only for the feudalists’ benefit.

    The rest are supposed to obey the rigged laws, pay the rigged tribute, be “civilized” in the rigged way, be good little sheep.

    After all, you get to have your rigged elections and your rigged “free press”, don’t you?

    Only the bankers get to be barbarians.

  50. Isnt it funny that most blogs are speaking that there is no real change in the fundamentals. And yet market continue to explode. This is why I think the blogs are looking at the wrong paramters. The real parameter is release of dollar from its status of being reserve currency and the rise of EURO.

    EU Unemployment

    Complete coverage of the rise of euro and fall of dollar at : CLICK HERE

  51. Back in the ’90s I had a conversation with a finance graduate student who went on for a long time about what a scam the mergers & acquisitions business was at that time: bad for shareholders, bad for the businesses, promised synergies never achieved. The only people who profited from these deals were the investment bankers who put them together. At the end of the conversation, I inquired what he was planning to do after graduation. His reply: “Mergers and acquisitions!”

    La plus ca change, la plus c’est la meme chose

  52. This is a repeat of a previous post on Baseline.

    Central Banker: The New “It” Career
    Young men and women, I invite you to consider a career in the “new and improved” Central Banking. The “old” central banker was pretty dull; you
    traveled a lot and gave boring speeches on such topics as inflation targeting and the heterogeneity of investor expectations. The financial crisis changed that. Here are some noteworthy Fed actions in the current financial crisis:

    1. Money For All
    Historically, we restricted lending to depository
    banks. This represented a “line in the sand” that
    was not crossed for 75 years, since the Federal
    Reserve Act of 1913. We have always found that Act
    somewhat restrictive. Fortunately, we found an
    obscure provision in the Act, which allows us to
    lend to virtually anyone under “unusual and
    exigent” circumstances. Under cover of this clause,
    we bailed out Bear Stearns – an investment bank, and
    AIG – an insurance company.

    2. Liberal Credit Terms
    Traditionally, the Fed loaned money based on secure
    collateral at a penalty interest rate. Collateral
    had to be top quality, and a substantial “haircut”
    was applied. The penalty interest rate was above
    the market rate, and was designed to encourage loan
    repayment at the earliest time possible. In the
    current crisis, the penalty rate was abandoned as
    it conflicted with the more important goal of
    rebuilding bank capital. We were also able to
    assist our bank clients by expanding the range of
    acceptable collateral to include “toxic” bank
    assets.

    3. Market Maker Not Just Liquidity Maker
    A strict interpretation of the Fed’s Lender-Last-
    Resort function limits the function to providing
    short-term liquidity when markets are disrupted
    and banks are unable to raise cash by selling
    assets, except at “fire-sale” prices. Loans were
    repaid when markets normalised.

    We waited patiently for financial markets to
    stabilize, but that did not occur; banks were
    unwilling to sell assets at the new fair value
    prices which were substantially below the pre-
    crisis levels. Some even suggest that banks were
    waiting for the Fed to “hang out its shingle”.
    Regardless, we were not going to wait for markets
    to self-correct; we stepped in , purchasing a wide
    variety of mortgage related securities. We became
    a Market Maker of Last Resort. Economic historians
    will be discussing this event for a long time.

    4. World Leader
    New York city is rightfully regarded as the world’s
    foremost financial center. This leadership was
    threatened in the current crisis, as many of these
    institutions, like Goldman Sachs, suffered losses.
    The crisis threatened to downsize these
    institutions and reduce their power. We infused
    capital and used other measures to protect their
    franchises and remain powerful players in world
    markets.

    Some observers suggest that our actions increase
    moral hazard by encouraging banks to push risk to
    the limit. We are mindful of the risks, but
    believe the benefits exceed the costs. There were
    also other issues related to market concentration
    that we overcame; J.P.Morgan Chase, and Bank of
    America bank acquisitions were approved, even
    though long-standing rules of market concentration
    were exceeded.

    The current financial crisis was somewhat of a
    surprise, but not totally unexpected. Crisis are a natural part of a dynamic economy. Excesses develop over time as a result of our “animal spirits” . Some
    even suggest that ,we the Fed, contributed to its development with easy money policies and acquiescence to unfettered deregulation.You know, we may be independent, but we are not stupid; we know what
    politicians and administrations want. The Fed has been in this business a long time; when we testify before congress, it is clear they want economic growth and low interest rates. Sure, there are occasional questions about financial stability, but Congress would “chew up and spit out” Fed officials who even hinted that interest rates would be increased without explicit evidence of excessive inflation.

    The Fed has many career paths; we need people with a variety of skills. You will have ample opportunity to demonstrate your skills and advance careers.
    Who knows , you may even aspire to be “top dog” – Fed Chairman. It is a position of supreme national importance. Greenspan was widely regarded as the
    second most important person in government. Bernanke, the current Fed Chairman is hailed as a “savior” for his work in the current financial crisis. You might even consider the number two job as a stepping stone to the number one job – President. Then you can “save” the nation from the next crisis,
    which is likely developing from the mountain of government debt. Now ordinarily you would not be able to move from the number two position to President, because of our two party system; but I suspect that the next crisis will be so big that the people will be looking for an independent candidate.
    The time may come when a smart financier is called upon to lead our nation. That time may be sooner than you think.

  53. Samuel
    you misunderstood the young man – he only wanted to go into M&A because he knew how to make a good job out of it and thus do a lot of good for society or else to show all those old gheezers how to do it right
    cheers!

  54. Oh no, they DO need to be defended, after the Treason the Bankers and Raters have wrought.
    Unless they were referring to jobs as tellers, which they may be grateful for in the ashes left by the Elites.