These past two weeks have seen a frenzy of investment banks and insurance companies on Wall Street going bankrupt or being saved by other companies or the government.
John Shoaf, a UVU alumnus who graduated in 2004, is currently in New York City, working on his MBA at Columbia University. He was also a senior associate at David N. Deutsch & Company, a Wall Street investment-banking firm.
“Yes, I think there were a number of clear signs,” said Shoaf on whether he saw this crisis coming. “People were looking at speculation on markets and there was a lot of excess lending. Most people on Wall Street had a sense of it happening, but no one expected it would be of this magnitude.”
In August, Shoaf hosted 40 students (seven from UVU) in NYC for “Pathways to New York,” an event that Shoaf created to let students experience the NYC business world for three days.
The students visited 13 major companies on Wall Street such as Merrill Lynch, Morgan Stanley, Goldman Sachs, as well as Lehman Brothers, the first investment bank that went bankrupt in these past few weeks.
“Lehman Bros. did not give any indication that times were bad and they were facing losing their jobs. One of our main organizers for Pathways was an employee of Lehman Bros.,” said Michael Snapp, director of UVU Career Services, who accompanied students on the trip. “There really was no talk about things going bad anywhere. People talked of the markets being up and down, but something like this never came up.”
After Wall Street started crashing, a $700 billion bailout plan was proposed, which the Senate approved last week. Shoaf agreed with the approval that using the government as a last-resort buyer is necessary for this situation.
Many people have seen their 401K and IRA accounts plummet this year with the unstable economy. “My IRA has dropped 20 percent in value,” said Michael Burton, a UVU senior. “It’s kind of discouraging to want to start an IRA right now; why invest now when there’s nothing to invest in?”
Shoaf said it was probably wise to not speculate whether 401Ks, IRAs and other markets will bounce back up. “It’s a good question everyone has on their mind.”
“I sure hope not,” said Shoaf on whether the U.S. is in for another Great Depression. “It will be interesting to see the ripple effect as it travels through the rest of the world’s capital markets.”
With the unstable economy, things might look down for students preparing to graduate and enter this field. “I think students who still want to go to New York for a career should still pursue internship opportunities out there. Not everyone is sinking,” said Snapp. “I feel things will turn around. There will be plenty of people who toss in the towel on their hopes and dreams. That will leave more doors open for those who don’t.”
Shoaf encourages students to do everything possible to learn about the markets, utilize resources now, prepare for a tough environment and think outside of the box.
“Living in optimism is good. It’s been a turbulent time of uncertainty,” said Shoaf. “Keep your head on straight and don’t be shaken up and we’ll come out on top.”