The Brown & White

Although recent high-profile mergers and sales within the financial industry have caused concern nationwide, some say their affect on Lehigh students looking for jobs won't be completely negative.

Investment banking firm JPMorgan Chase & Co., in conjunction with the Federal Reserve, purchased The Bear Stearns Companies Inc. for approximately $10 per share last month.

The collapse of former Wall Street powerhouse Bear Stearns was credited to lack of confidence and not lack of capital said Christopher Cox, chairman of the securities and exchange commission, in a statement March 20.

Aneesh Varma, '06, an analyst at JPMorgan said many companies, including Bear Stearns, had a lot of loans floating in the air, some of which were not built on substance.

"In general, banks give out loans to people and companies, and a lot of loans were being given out while the banks were able to pass on the risk through new architecture in the financial system," Varma said.

Finance major Melissa Montalvo, '08, said financing loans is very rigid and banks do not want to offer any credit.

This has reflected negatively on several aspects of the financial industry, such as the real estate market, because sales have decreased. Consequently, people cannot get any loans because money is scarce.

"There were a lot of indications that there might be issues like this," Varma said. "Companies that avoided [the signs] are now facing issues. Those that paid attention are the ones that do not have massive losses. This especially applies to companies that planned well, saw the dangers, and didn't run with scissors."

Senior finance major, David Rosengarten, has worked for Bear Stearns as an intern and has been offered a job at JPMorgan upon graduation.

"Having worked at Bear Stearns for the last two summers," he said, "I could not believe they were going to get bought, let alone by the company I am working for next year."

Rosengarten said jobs are being lost because of the merger.

"I feel terrible that many of my previous colleagues, including Lehigh alumni, will be losing their jobs," he said.

According to Varma, several job cuts have been made across Wall Street and some more might be anticipated.

"JPMorgan is at the bottom of the job cut list, which makes me feel comfortable that we are doing something right in the game," Rosengarten said. "But certain areas in various firms are going to be scaled back marginally, depending on each firm."

According to Montalvo, this financial crisis is an opportunity for college graduates to take on more professional responsibility.

"For companies right now, it's less expensive to hire [college graduates] than someone that is in their 30s or 40s with years of experience that will expect to get paid much more," Montalvo said. "Right now, it is better to be young. We have the opportunity to prove ourselves and show that we can bring value."

Rosengarten is confident in his future position at JPMorgan and does not anticipate drawbacks with entering into the investment banking industry.

"I am not worried about my job," he said. "After analyzing the deal and the aftermath, I have come to understand that Bear Stearns would have gone bankrupt if not for JPMorgan and the Federal Reserve. There was just too much doubt in investors' minds about Bear's financial stability."

Varma is also confident in JPMorgan's performance in the midst of this financial crisis.

"We were one of the few firms that were hit minimally by this crisis, and we performed well to this punch," he said.

Rosengarten expressed his concern for other financial firms on Wall Street.

"Other Wall Street firms should be extremely worried during this time of financial crisis," he said. "Bear Stearns is a monumental example of why other investment and commercial banks should be worried."

Montalvo said her job after graduation was not affected directly by the merger.

"For students going specifically into investment banking, it is nerve-wracking," she said.

Consequently, some firms were forced to discontinue internship programs, Montalvo said.

Varma said Lehigh seniors should not be dissuaded from pursuing employment on Wall Street.

"Lehigh produces some of the finest people," he said, "and I've met a lot of people on Wall Street that know Lehigh. Lehigh students that have come to Wall Street have done well."

Varma said he still has full faith in employment in financial services. He said the industry has a vast employment area and growth prospects, even though Wall Street is suffering some setbacks.

Varma suggests this financial crisis should warn students to thoroughly research companies before applying for and accepting job offers.

"This is an opportunity to go to those companies that have differentiated themselves in this crisis," he said.

Students can use the current issues to evaluate a potential employer, he said.

"Lehigh seniors should look at the right companies - companies which have shown through this crisis that they are made of steel, have the right attitude, are not short-sighted, and [they should] pursue the right position within those firms," Varma said.

Varma also said it is important students understand the policies of a company before they sign.

"They should engage in discussion with alumni and professors to learn about the firms and what positions to go into, and they should do a lot more homework before they start applying," he said.