The New York Times
Bear Stearns’s New Hires Become Job Seekers
By: LOUISE STORY
Published: April 19, 2008
Thousands of people are losing their jobs on Wall Street — some before their first day of work.
Bear Stearns CompaniesThey polished résumés; they sweated interviews; they landed dream jobs. But now a small group of college and business school students are discovering that their careers at Bear Stearns ended before they began. JPMorgan Chase, which bought the beleaguered investment bank last month, rescinded many of their job offers.
Yashoda Khandkar, a senior at the University of Pennsylvania, is among 250 Bear hires who now find themselves unemployed in one of the worst financial job markets in years.
“The worst part about the entire situation is that it’s a really hard market for us to look for other jobs,” Ms. Khandkar said. “We probably can’t get as good of jobs as we would have had.”
Ivy Leaguers like Ms. Khandkar have more options than most, of course. And for now few of them have mortgages, unlike millions of Americans who are struggling just to pay the bills.
But instead of starting new jobs at Bear, these students are now hunting for work along with a growing number of bankers and brokers. Since August, the financial industry has shed more than 38,000 jobs as a result of the credit crisis and the collapse of Bear Stearns. Citigroup added to the misery on Friday, saying it would eliminate 9,000 more jobs. No one thinks the pain will end there.
The angst is most acute at Bear. Many of its 14,000 employees are expected to lose their jobs in the coming months. JPMorgan is running what its chief executive, James Dimon, has called a “military operation” to decide which employees at both banks will stay and which will go.
For now, many of Bear’s might-have-beens say they will keep hunting for jobs on Wall Street, where the typical new college graduate earns a starting annual salary of $80,000 or more, plus bonus.
And JPMorgan is offering the student recruits consolation prizes, provided they play by its rules. They can keep hefty signing bonuses that Bear promised them — $10,000 for college seniors, and about $50,000 for M.B.A. students — if they sign contracts in which they agree not to sue the bank over their rescinded jobs. If they do not sign, JPMorgan says, they cannot keep the money, which many of the students received last fall.
JPMorgan is also offering to let the students use its career counseling center, where they can hone interview skills and brush up résumés. The bank will pay students who accepted summer internships at Bear Stearns, putting some to work in its own divisions and others to work at charities.
Before disaster struck, Bear Stearns — one of the most prestigious employers in campus career offices — signed on about 300 undergraduates and M.B.A.’s for full-time positions and about 300 interns for the summer. But those offers were thrown into question in March, when the 85-year-old company, undone by what amounted to a bank run, agreed to be acquired by JPMorgan in a controversial deal brokered by the federal government.
The students’ fate depended on which corner of Bear they were going to join. Those who had signed on in the equities, banking and fixed-income divisions generally lost their jobs. Those who had joined in the energy, prime brokerage and merchant banking division will go to work for JPMorgan.
Elsie Mbugua was one of the lucky ones. A senior at Tufts who grew up in Kenya, Ms. Mbugua will work in energy trading at JPMorgan.
“I could have been where any of my friends were,” Ms. Mbugua said. “In another department, the outcome would have been different.”
For the Bear analyst class that will not be, the last month has been a roller coaster. The fate of their first jobs — the culmination of years of hard work — seemed to rise and fall with news from the financial markets.
The first sign of trouble came March 12, when Alan D. Schwartz, the chief executive of Bear, appeared on CNBC as rumors swirled that the bank was in trouble. After the program, a Bear human resources staff member e-mailed the clip to a group of incoming analysts and wrote a note telling them the bank was sound.
Even after JPMorgan agreed to buy Bear for a fire-sale $2 a share, Bear staff members assured some students their jobs seemed safe. When JPMorgan subsequently raised its offer to $10 a share to placate angry Bear shareholders, the message turned less certain.
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