“I Was Shocked I Would Be Joining a Lower-Tier Commercial Bank”: Life After Buyout
As we near the “big Money Bonfire of 2008,” a number of questions weigh heavily on the nation’s mind: Should the federal government receive shares in the banks and companies being bailed out? Is $700 billion enough? Can we have another day to think this over, Mr. Paulson? But most of all the nation has been wondering what will happen to current and prospective Ivy League bankers. This is where Ivygate comes in. Last week we ran a feature where worried bankers told you they were “trying to stay positive.” This week we bring you…um, more quotes from bankers.
George, an Ivy-educated pseudonymous banker working as an analyst at Merrill Lynch, describes how he found out about Bank of America’s buyout of Merrill:
I was shocked. I was screaming.
One of my friends at Bank of America texted me, ‘Hey, we might be buying you guys.’
I was in denial. You see, Merrill has a much better repuation than a commercial bank like Bank of America. I was shocked I would be joining a lower-tier commercial bank. There’s a feeling, ‘I didn’t go through this whole interview process to work at a commercial bank.’
Hopefully, Bank of America won’t change too much of Merrill’s culture.
Jeffrey, a pseudonymous Ivy grad working at JP Morgan, had this to say:
Lots of people will be jobless in the coming months.
I applied for jobs at Lehman. I could have been that guy with the Lehman job. It’s very frightening.
After the jump, George returns to tell us why $700 billion isn’t enough and why Goldman Sachs’s and Morgan Stanley’s decision to become “bank holding companies” is the end of i-banking as Ivy League cash bonanza.
Earlier this week, Morgan Stanley and Goldman Sachs became “bank holding companies.” This means they will face stricter regulation in exchange for Uncle Sam’s promising to have their backs. Or something. It also means they will have a harder time making the inconceivable profits we all associate with investment banking. According to George, this may spell the end of i-banking’s mysterious popularity among Ivy League students. George says:
Changing compensation will obviously change the attitude of students toward the industry. They might go to med school or law school instead.
This is a sad week.
We may be losing the competitive advantage for getting the best talent.
George admits he is a little fearful his job will be pulled but remains confident he will have a place at Bank of America:
Nothing is actually secure. But I guess Merrill people should feel more secure because Merrill is a better investment bank than Bank of America.
George also has some ideas about Paulson’s proposed $700 billion bailout:
It’s a good step toward stabilizing the turmoil. If the government can take the balance sheet pressure off the companies then the companies will look better going forward.
Whether $700 billion is enough is another question.
Usually, when you invest in a company you receive shares or some type of stake for your money. Should the government receive shares in exchange for this unprecedented investment? George says:
Obviously that’s not going to be good for Wall Street.
In the long-run I’m not sure we want state-owned enterprises.
Why that would be…communism!
This crisis just got ugly.
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