Layoffs expected to shred Wall Street ranks

“They said, ‘Look, we’re not hiring right now,’” said Steven Allen, board member of the International Association of Financial Engineers, which co-sponsored the event. “This was the first year you felt that people think it’s worse than it was. There are jobs, but it’s going to be much harder.”

One prospective quant faced with dwindling job prospects is Zaw Myo Thant, who is pursuing a master’s in financial engineering at NYU’s Polytechnic Institute. He described the mood among his classmates as “pretty grim.”

“Most students are already having difficulties finding an intern position, let alone full-time positions,” said Thant, 32.

Amid the gloom, there could be a silver lining, at least for consumers. Fewer high-risk assets being traded should provide a more orderly marketplace. Ideally, that would safeguard against further market spasms like those that have wiped out billions in investors’ retirement savings and other holdings.

“We can’t have Wall Street producing defective products again,” said Edward Yardeni, an independent market analyst. “They don’t necessarily kill, but they do a lot of damage.”

He said the industry will likely go back to the basics of the capital markets — “stocks, bonds ... things normal people can understand.”

Yet if banks remain stingy with their money, the credit pinch that has squeezed consumers and small businesses in need of loans could worsen.

“Banks won’t be lending as much, and that’s going to cause some pain,” said Howell of Dartmouth’s Tuck School of Business.

Opinion is mixed, though, on whether a slimmed-down financial industry will really become more prudent or whether the pursuit of profits will inevitably restore the kind of freewheeling days the led to the meltdown.

Much will depend on what new regulations stem from the crisis, NYU’s Philippon said.

Some lawmakers have called for tighter limits on how much leverage financial firms can assume, among other restrictions. Free-market advocates, though, warn that burdensome rules could stifle innovation and undercut the industry.

“My best guess is that the U.S. economy remains vibrant and efficient,” Philippon said. But the shape and scope of any new regulation “will be the biggest factor” for the financial sector’s future success.

“That’s going to determine whether it’s a dynamic sector or a dead one,” he said.

1|2|3

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email