The Collegian
Tuesday, August 09, 2022

Wall Street crisis throws job market into uncertainty for 2009 grads

The Senate passed a revised version of the $700 billion rescue package on Wednesday night that aims to bail out the crippled U.S. financial system -- a move that could send a boost of confidence to Wall Street after the rejection of a similar House bill on Monday sent global markets plummeting.

House lawmakers are now scrambling to muster the votes necessary to get the bill passed by Friday. The crisis reached a crescendo after the House bill failed, prompting the Dow Jones industrial average to plunge nearly 778 points on Monday in what amounted to the worst day on Wall Street in two decades.

Stocks partially rebounded Tuesday and fell slightly Wednesday, but here on campus finance students were faced with mounting uncertainty about the job market.

"It makes for a tough job market for the [E. Claiborne Robins School of Business] kids, including myself, who really wanted to get into finance and work on Wall Street," said Sean Sneeden, a senior economics major who's aiming to work on Wall Street after graduation. "I'm going to keep my options open for anything of interest to me. And I'm talking to as many people as possible. Obviously there are a lot of people in my boat."

The stock market's drop was just as unsettling for junior Tom Borwick, a business administration major with a concentration in finance.

"We're reconsidering our options for working on Wall Street," Borwick said of the attitude among many finance students, who make up 17.5 percent of all students who have declared a major at Richmond, according to the Registrar's Office.

Cindy Deffenbaugh, director of financial aid at the University of Richmond, said the crisis would not affect the school's ability to give out financial aid next year.

But the greater challenge may come from students who rely on private loans to finance their education. The number is small -- about 3 percent of students here -- but as credit markets tighten and banks become increasingly reluctant to lend money, it could present problems.

"No one can get credit," said James Earl, an associate professor in the business school who advises finance students. "You can't have an economy without credit markets."

The ability to borrow money from a private lender is contingent on students' credit-worthiness, their ability to obtain a co-signer on the loan and the availability of lenders. So far, students haven't faced any difficulties getting private loans, Deffenbaugh said.

The federal government uses family assets -- which could take a critical hit if banks continue to fail -- to determine a student's eligibility for need-based aid, but family income usually carries more weight.

President George Bush, both presidential candidates and top economic officials including Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have expressed their approval for the plan, which they say is necessary to avert a widespread meltdown of the U.S. economy.

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Congressional leaders in the Senate added substantial tax cuts to their bill in an effort to convince House Republicans to claim the 12 votes necessary to secure the bailout's passage.

It's unclear how much the economic crisis, even with the bill's passage, will affect job prospects for 2009 graduates. But what is certain is that graduates seeking careers in the finance industry will be faced with significant challenges, according to the latest survey from the National Association of Colleges and Employees, conducted from Aug. 4 to 27, before the finance system reached such a critical stage.

But the waning economy isn't fazing all employers, who in general plan to hire 6.1 percent more graduates in 2008-09 than they did in 2007-08, according to the survey.

Still, signs of strain on the economy are visible. It's the sixth-straight year employers are projecting an increase, but it's also the first during that time that the increase isn't in double-digits.

"Everybody's worried about getting a job," said Yolanda Crewe, associate director of employee relations at the Career Development Center. "It's tough because you have a flood of people in the market looking for jobs."

She encouraged finance majors and other job seekers to be flexible and open to other industries. Finance-related companies that normally hire 100 people are now searching for 50 to 75 people instead, she said.

On campus, the Portfolio Management Group, composed of Richmond students who pool at least $300 each for investments, has lost 4.97 percent on the value of its portfolio in the last three months. That's better than Standard & Poor's Index, which is down 9.16 percent.

It's the peak of job hunting season for graduating business majors, and some of the firms who typically recruit at Richmond haven't come, said Haddon Mindnich, a senior and president of the PMG.

"All of this is cyclical," Mindnich said of the market. "And if you're in it for the long-term, I think you can ride it out. If you're a short-term investor, diversifying your portfolio is the best defense.

"I plan on getting a job in the finance sector, knock on wood," he continued. "But they're not hiring at the way they were a few years ago."

While nearly all who have money invested in the market have seen declines, some have been worse off than others. One student, who on condition of anonymity showed a Collegian reporter his investments, confirmed he had lost nearly $4,000 in the market during the past year, after starting with $10,000.

The historic implications of the crisis were not lost on academic departments throughout campus. Business students have frequently discussed the crisis in class, and on Friday, the University of Richmond's political science department hastily organized a forum to discuss it.

"If we're able to bail out Wall Street with $700 billion, why can't we help Africa?" a female student said at the forum in the Brown Alley Room.

Sneeden, the finance student, said that while the crisis would change his initial plans, he acknowledged there would be other opportunities.

"I did not cause the credit crisis; it's out of my control," he said. "I think there will be opportunities other places, and I'll find something somewhere."

Contact staff reporter Dan Petty at dan.petty@richmond.edu

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