Friday, November 7, 2008
Has i-banking permanently lost its sheen?
LONDON, UK — Current market conditions and mass lay-offs are making students re-think joining the ranks of investment banks. Newspapers in both the US and UK have reported this and, although the evidence seems anecdotal, it is a story that instinctively makes sense.
However, it’s not only job security leading to the hesitation of students, but the view that bankers have now been exposed as contributing so little to society. Structuring and trading complex banking products (in this case collaterised debt obligations or CDOs) reminds me of building a room full of mirrors, then disappearing with the cash. CDOs are the very reason why sub-prime defaults are linked to, and therefore have crippled, the wider global economy. Sure, structured finance bankers have lost their jobs and done little for the world, but will there really be a sustained trend away from joining i-banks?