Must I Bank?

May 1, 2008 11:14 AM

The Financial Services industry has seen it before; massive job cuts after the dot com collapse of 2001 forced many out of the business, some permanently.

While the "hire and fire" culture of banking is well documented, The Credit Crunch of 2007 is claiming its share of jobs as well, with many observers predicting future, deeper rounds of redundancies.

But the Investment Banking industry is not at all monolithic; while some areas cut back others thrive. And skills gained to enter banking are broadly applicable elsewhere; general management, University lecturing, and Sales to name but a few fields ex-bankers have happily decamped to.

Regardless of their plans for new found free time, before touching up that CV many enduring cuts this time around should first ask themselves the question "Must I Bank?".

posted by Mutant (34 comments total)

A personal note: I just left my banking job, and Mrs Mutant left her's at the end of last year.

Each of us left for reasons unrelated to the Credit Crunch, but this WSJ article (originally read in the New York print edition the first week of April) really hit home, as we both had been asking ourselves this very same question.
posted by Mutant at 11:15 AM on May 1, 2008

The auto/steel/defense/you-name-it industry has seen it before; massive job cuts.... forced many out of the business, some permanently.

Happens, or should happen, to everyone.
posted by three blind mice at 11:34 AM on May 1, 2008

Not that I'm not sympathetic, but as three blind mice alluded to, this seems to be a textbook definition of a correction.
posted by ninjew at 12:56 PM on May 1, 2008

I was just reading the New York Times article on Bear Stearns' hires not being, well, hires anymore. I love New York Times articles that deal with money, they are almost satire:

Cheyenne Sparrow, a junior at the Wharton School at the University of Pennsylvania, said she was skeptical all along, even though her contact at Bear assured her that everything would be fine.

“My parents work in business, and they’ve sold companies, so I know the first thing you do is tell all the employees, ‘Everything will be fine,’ ” Ms. Sparrow said. “It’s a stall tactic.”

If anything, without the influx of first year bankers with six-figure paychecks, Manhattan and London prices should be going down, right? I mean that should at least make a pierre de tierre a little more in reach, or at the very least, the John Varvatos store will become a CBGB, completing its natural life cycle.
posted by geoff. at 1:06 PM on May 1, 2008

“My parents work in business, and they’ve sold companies, so I know the first thing you do is tell all the employees, ‘Everything will be fine,’ ” Ms. Sparrow said. “It’s a stall tactic.”

Heh. In response to a hard question (from me) about the strategic direction a project, a colleague of mine (weasel) said "Oh, I just know everything will be fine."
posted by KokuRyu at 1:13 PM on May 1, 2008

But what some people gonna do? Go into the "service" industry? Who the hell is everybody gonna service? The Chinese?
posted by tkchrist at 1:21 PM on May 1, 2008

Not that I'm not sympathetic

And neither am I not sympathetic, but corrections are a sign of economic health.
posted by three blind mice at 1:24 PM on May 1, 2008

Cheyenne Sparrow, that can't be her real name can it?
posted by drezdn at 1:25 PM on May 1, 2008

Bah. I left Salomon Smith Barney at the very very beginning of 2002. Best thing I ever did in my entire life. That place turned me into a total asshole.

(Now I'm just a recovering asshole... not nearly as bad)

Listen, when you're so obsessed about doing well at your job in a shit economy that you pull out business cards with your free hand when the ER tech putting your entire arm in a cast tells you he's got a few old IRAs to roll over, you are, dear friends, an ass. Fortunately, 11 days on Percocet on the couch recovering from said injury allowed me to realize that and GET OUT.
posted by bitter-girl.com at 1:34 PM on May 1, 2008

But what some people gonna do? Go into the "service" industry? Who the hell is everybody gonna service? The Chinese?

It's not the same as a GM or Ford worker losing a job and then trying to find another assembly-line job and then ending up at Wal-Mart.

A lot of folks work in the finance sector because of the money. Their skills are perfectly transferable, but the only problem is they will earn $100K a year instead of $500K.

Mutant mentioned sales as a potential new career. As well, with their financial and strategic expertise (not to mention sheer brainpower and drive), these folks could easily become skilled managers. With their knowledge they could become journalists! Or management consultants. Self-help book authors. They could found their own companies.

All of these careers are technically considered "tertiary", or in the "service industry". It's a big, wide word out there, and what most people don't realize is that, in specific sectors, there are talent shortages that are not going away, despite the economic downturn.
posted by KokuRyu at 2:00 PM on May 1, 2008

I did some contract programming for a sub prime lender that my parents ran. That, coupled with listening to them talk about work re-enforces my position that most banking is "fake work" and bad for you spiritually.

Entire office buildings full of drunks/addicts/c*nts/*ssh*les/perverts.

Though I did lock my brother in a recycling bin there, that was a positive experience.
posted by The Power Nap at 2:04 PM on May 1, 2008

I still have my financial services sector job, but I'd guess even odds that I won't have it by year-end. That's a little better than the 2:1 odds I put on it when Bear crashed.
posted by mullacc at 2:07 PM on May 1, 2008

Entire office buildings full of drunks/addicts/c*nts/*ssh*les/perverts

* Like my officemate, caught fucking our (also-married) secretary on his desk, but given a chance to find a new job, because his dad knows the right people.
* Like the guy down the hall who came into the office high on coke with a gun, but who will NEVER get fired, as he makes too much money for the company.
* Like the mutant running the joint (who, I might add, left his first wife for a fellow employee) who yelled at me for wearing sleeveless shirts (when I had a cast on my arm practically to the armpit).

I can't believe that place didn't force me to drink, like it did the rest of 'em.
posted by bitter-girl.com at 2:23 PM on May 1, 2008

Ah, the joy of being a stockbroker. Immune from the boom/bust cycle of the unfortunate bankers on the other side of the wall, and better hours, too. Why the best and brightest are drawn to that brutal profession I have no clue.

Also eponysterical.
posted by leotrotsky at 2:35 PM on May 1, 2008

Actually, no, leotrotsky...name predates the hell-job.
posted by bitter-girl.com at 2:40 PM on May 1, 2008

.
posted by Alfonso Javier at 2:45 PM on May 1, 2008

A personal note: I just left my banking job, and Mrs Mutant left her's at the end of last year.

Congratulations.
posted by TheOnlyCoolTim at 2:47 PM on May 1, 2008

I just can't find it in myself to feel even the tiniest bit of empathy/sympathy for anyone in the financial industry. These are the same poo-holes who encourage profit through job elimination in every other industry.
posted by Thorzdad at 3:25 PM on May 1, 2008 [3 favorites]

A friend from high school, for whatever reason, left a fairly decent job to become a mortgage broker in late 2005/early 2006 - around when the river of crap mortgage origination was at its worst. That obviously soured, and he basically became a college-educated real estate industry migrant worker. I think his latest job is something involving foreclosed homes.

(Last week Bloomberg counted 48,000 announced job losses so far)
posted by milkrate at 4:11 PM on May 1, 2008

Best? Brightest? By whose definition? Self-absorbed, money-first consumeristas.
Bleeahhh. Leeches. No-value-added skimmers. Clear the temple.
posted by beelzbubba at 6:10 PM on May 1, 2008

Like it or not, these money-obsessed people (who are loosing their jobs), if not the bedrock of the global economy, add value and help diversify the financial system. 1929 isn't going to happen again because these thousands of monkeys are working hard at thousands of different schemes to leverage every ounce of value out of a dollar. If they weren't there, a lot of us would have to go back to riding the rails every time there was a correction like we are seeing right now.
posted by KokuRyu at 10:06 PM on May 1, 2008

I just can't find it in myself to feel even the tiniest bit of empathy/sympathy for anyone in the financial industry.

*raising hand quietly*

Do you also include the SECRETARIES in the financial industry in your scorn? Because folks like me tend to be the first that get the axe before the six-figure-salary folks we work for, and we have a very different type of job.
posted by EmpressCallipygos at 8:56 AM on May 2, 2008

The comments are the most fascinating aspect of this thread.

alcoholic
assholes
money-obsessed
self-absorbed
money-first
leeches
no-value-added skimmers
"fake work"
bad for you spiritually
and apparently they somehow encourage job cutting.
can't find it in myself to feel even the tiniest bit of empathy/sympathy for anyone in the financial industry.

--

There are millions of people who work in the financial industry. Very few of them are mega-rich superstars. Most of them are middle-class people who are attempting to help clients get the most value out of their day, whether the client is a parent who is concerned about raising a child, sending them to college and retiring, or if that client is a company who wants to provide better services.

Yet somehow, apparently, they are all pure evil.

I'll agree that some financial professionals are useless, but that's true of all professions. These broad swaths of insults aren't interesting or useful though, and they certainly aren't the best of the web.

Thanks for an interesting and timely post, Mutant. Fie to haters.
posted by Project F at 10:54 AM on May 2, 2008 [1 favorite]

Most of them are middle-class people who are attempting to help clients get the most value out of their day, whether the client is a parent who is concerned about raising a child, sending them to college and retiring, or if that client is a company who wants to provide better services.

Exactly. Plus, keep in mind that most of the big banks are managing money from institutions- local governments, pension plans, endowments, foundations. Everybody needs more money, and it's not for yachts and caviar- it's so your father can receive the full retirement benefits he was promised and your college can give financial aid to students who wouldn't be able to afford it otherwise. Managing money on behalf of others is a noble calling.
posted by ThePinkSuperhero at 11:23 AM on May 2, 2008 [3 favorites]

Managing money on behalf of others is a noble calling.
Oh please.
Volunteering your time to teach underprivileged kids is a noble calling.
Providing healthcare to African villages is a noble calling.
Being a money manager is a highly profitable career decision.
posted by Thorzdad at 1:09 PM on May 2, 2008 [1 favorite]

Being a money manager is a highly profitable career decision.

So is being a doctor, what's your point? In both cases, being good at what you do can positively impact a large number of people.
posted by ThePinkSuperhero at 1:31 PM on May 2, 2008 [1 favorite]

Thorzdad: Let's say somebody generously donates $10m to your favorite charity. What should happen?

1) The money should sit in a savings account until it is spent.
2) A financial professional should work with the charity to maximize the amount of good that can be done with that money.

The idea that the financial professional in option 2 lacks nobility is absurd. In fact, it's a position that can only be supported on a basis of pure bigotry and hatred. If you disagree with this assessment, and can offer an insightful and logical argument as to why the financial professional in case 2 is evil, I'd be very interested to discuss it.

As it stands, it doesn't sound like you have a real argument though. It just sounds like you're a bigot.
posted by Project F at 1:38 PM on May 2, 2008

Ok, I haven't been able to follow this thread as much as I'd normally do as today Mrs Mutant and I headed to Paris and attended a meetup this evening.

In any case, I'd like to illustrate how out of touch some of these comments are with the story of a colleague / friend of mine.

She attended a rather high end Business School in the North Eastern United States, and graduated not only with an exceptional GPA but also with almost six figures in debt.

Had her choice of employers during the interviewing round, but we (I was with Deutsche Bank at the time) managed to recruit her into our graduate trainee program. Best and brightest? Absolutely. Both GPA and University proved this was the case without a shadow of a doubt. But don't take my word for it; its common knowledge that the Investment Banks toss around so much cash in the form of entry level salaries that they can take their pick any graduating class.

I had the pleasure of working with this young lady for six years before my job was relocated to Europe. She stuck out eight years with Deutsche, then moved to Fox Studios where she ran a department doing the financial planning for major motion pictures.

When she visited me in London a few years ago, she justified her career decisions as the first eight years were to pay off student related debt, and the second eight years were to build a financial cushion so she could take care of herself the rest of her life.

And about one month ago she started a two year assignment with The Peace Corp, working on a remote island chain in The South Pacific.

She intends to make a career of it. She always did, just she couldn't afford - after securing the best possible education for herself, and making the most of the opportunity (i.e., the chance to gain a world class education) - to work for The Peace Corps. To do so at that time would have meant she'd be in debt her entire life, and have little to no chance to obtain financial security for herself.

So she made a rational choise. And guess what?

Banking didn't tarnish her soul. It didn't twist her character. And she most assuredly wasn't evil at the outset.

Just someone who made a rational choise - the highest paying employer - when presented with a problem (staggering debt) and a variety of options.

As other people have pointed out upthread, you can't generalise.



Thorzdad -- "Being a money manager is a highly profitable career decision."

Under the right circumstances the job may indeed pay well. But I know of one particular money manger, highly religious, who tithes.

That's right, gives 10% of his pay to his church, to charity. Now I don't know if that's gross or net and that isn't the point. But I do know something about the salary distribution of US earners, and he probably gives more in one year than 85% of the people reading this comment would be able to give in their lives. Note that emphasis is on would be able as I doubt most casting aspersions in this thread are so pious themselves.

Like my friend serving with The Peace Corps, he's not the only religious money manager, and these are not the only two principled individuals working in financial services.
posted by Mutant at 3:27 PM on May 2, 2008 [5 favorites]

Mutant: thank you for re-proving the point.

I must admit that I took somewhat the easy way out when I pointed out that most people in finance are not, in fact, making millions. I figured that the easiest way to prove that the generalizations were absurd was to point out that not all financial pros are managing directors at 85 Broad Street.

The reality is that my experience with the super-high earners is very much the same as yours, that many of them are good people who were in no way corrupted by their work. One obvious example is a woman I've worked with in her post-financial career, where she runs a non-profit and she supports numerous other non-profits.

She brings enormous good to the organizations she supports not only because of her personal checkbook, but also the immense value of her rolodex from her years of trading, and then further years running a repo fund.

The cartoonish imagery of financial pros as all being exceptionally well compensated and supremely selfish and evil is just that though, a false and invented image made by people who want to pretend that their bigotry is somehow justified.

But like nearly all cases of bigotry in the world, it isn't accurate, it isn't justified and it isn't useful.
posted by Project F at 7:40 PM on May 2, 2008

Thanks for the post, Mutant. Could somebody wiser than me elaborate on which parts of the financial industry are doing well right now? I've heard that many hedge funds are emerging from this mostly unscathed. Is this true?
posted by onalark at 1:13 AM on May 5, 2008

onalark: Many equity-focused hedge funds had great years last year. Some because financial shorts worked out well and many just due to volatility. Volatility in general is beneficial to most hedge funds because they often hold both long and short positions*. Most equity-focused hedge funds I know about were roughly flat through the first couple months this year, and some have taken advantage of this March-April rally.

Aside from some notable blow ups, it seems that many credit-oriented hedge funds were nimble/savvy enough to stay away from the worst of the sub-prime issuances. Securities that would have normally went to hedge funds never got off investment bank balances sheets.

There are some counter-cyclical financial sectors as well. For example, firms that invest in Agency mortgage securities (for example, mortgage-backed securities issued by Fannie Mae, which have an implicit government guarantee) are experiencing the best return on equity in years. They benefit from low interest rates, but don't take credit risk. Companies such as Annaly (ticker: NLY) and Capstead Mortgage (CMO) are the primary examples. Carlyle Capital is the obvious exception, but I'd argue they were executing a very different (and inexplicable) strategy.

(*fyi, a long position benefits when the value of a security goes up, a short position benefits when a security goes down)
posted by mullacc at 6:18 AM on May 5, 2008

What does it mean to be equity-focused? What's an example of a non-equity-focused hedge fund? I should probably turn this into an AskMe about a good book for learning more of the terminology and basic theory in investment banking and finance :)
posted by onalark at 8:54 AM on May 5, 2008

A hedge fund that focuses on equities invests primarily in stocks (and derivatives, like put and call options, with stocks as the underlying asset). Usually there is a theme--one hedge fund may specialize in technology stocks while another looks for undervalued companies in any industry. Other hedge funds invest only in debt-instruments, like corporate bonds, government debt, mortgage-backed securities and other "fixed income" type of investments. And then there are hedge funds that focus on currencies and commodities. Some hedge funds pick a theme, like macroeconomic events, that calls for investments in various asset classes depending on the situation. Other hedge funds offer some mix and match of all the above.

Wikipedia has a list of various hedge fund strategies.

It's pretty much impossible to generalize much about "hedge funds" in general given all the different strategies out there.
posted by mullacc at 9:19 AM on May 5, 2008 [1 favorite]

Thanks mullacc, that was really helpful!
posted by onalark at 11:48 AM on May 5, 2008