Wall Street - land of job uncertainty

For MBA students, most jobs and internships are secure for now. But that could change quickly if the credit crisis drags on.

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By David Ellis, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Last fall, as bad news about the credit crisis began to pile up, MBA student Brendan McHugh started to wonder about his chances of securing a coveted internship at a top securities firm.

Yet McHugh, 26, was determined that he would be working this summer. The first-year student at the University of Virginia's Darden School of Business flew to New York twice at his own expense to network with potential employers. He even considered shifting his focus altogether from sales and trading to private wealth management.

"It was a crazy environment for a couple months there," he said. "I had a couple of banks directly tell me that I should consider other options."

McHugh scored his top choice: working as a summer associate at Merrill Lynch & Co. (MER, Fortune 500) in New York City. In years past, securing such a position was virtually a guarantee for a full-time job offer - and for McHugh that may happen.

Or it might not. For the thousands of MBA students starting internships and first jobs in the financial sector, these are uncertain times. On Tuesday, the financial research firm Celent estimated that the U.S. banking industry will lose some 200,000 jobs over the next 12 to 18 months.

The high-profile purchase of Bear Stearns (BSC, Fortune 500) by JPMorgan Chase has fueled speculation about how many jobs will be shed once the two firms combine. Fellow financial institutions Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) are expected to continue to report losses when they announce quarterly results in the coming weeks, and there is talk that regional banks could suffer a rash of failures, suggesting more tough times ahead for workers in the industry.

The good news for people like McHugh is that the credit crisis, which has infected nearly everything associated with Wall Street, has so far largely spared students at the nation's premier business schools.

Recruiters from top-shelf Wall Street firms like Lehman Brothers (LEH, Fortune 500), Morgan Stanley (MS, Fortune 500) and Bank of America (BAC, Fortune 500) continue to maintain strong presences at campuses nationwide seeking out top MBA talent. And tales of rescinded full-time job offers remain few and far between.

There are even tales that students scheduled to intern at Bear Stearns (BSC, Fortune 500) this summer still have assignments, but at Bear-acquirer JPMorgan Chase (JPM, Fortune 500) instead. Calls to JPMorgan requesting comment on the matter were not immediately returned.

Some hopeful signs

At Cornell University's Johnson School, where as many as half of the 300-plus full-time MBA students typically pursue finance careers, there have been few signs of fallout, said Karin Ash, the director of the school's career management center.

Typically, most B-schoolers secure their summer positions and full-time job offers by the end of the fall semester.

"If the economy had shifted as dramatically as it did six months ago, we might have seen a difference," said Ash, a board member of the MBA Career Services Council, an organization that represents school placement officers and MBA recruiters.

On the West Coast at the University of Southern California, Peter Giulioni, executive director of the Keenan MBA career resource center at the Marshall School of Business, sees few changes from a year ago, although he receives fewer last-minute requests from employers looking for candidates.

"I'm not getting that call," he said.

Giulioni, a former partner at Deloitte Consulting who assisted with on-campus recruitment before retiring from the firm in 2004, said Wall Street companies will sustain their hiring levels and recruitment efforts through the rough patch so they won't have to scramble for qualified workers when the economy turns around - an error that cost them dearly after the tech bubble collapsed.

"When things do pick back up, they want to make sure the pipeline is still there," said Giulioni. "This is not a faucet they can turn on or off."

Along the school front

Still signs remain worrisome for those due to graduate both this year and in 2009.

In just the first two months of this year, the finance sector, which also encompasses the battered mortgage industry, has shed 22,0000 jobs, according to the Department of Labor. And that number is expected to balloon by year end.

In New York City, the cortex of nation's financial services industry, more than 20,000 jobs are expected to be lost over the next two years, according to a study published earlier this week by the city's Independent Budget Office.

Sensing that pressure, Dinesh Narayanan, 28, who is set to graduate next spring at the University of Michigan's Ross School of Business, knows he will have to sell himself as a worthy hire during his summer internship in Lehman Brothers' investment banking division.

"We are going to have to work twice as hard," said Narayanan.

This academic year, more than 158,000 students will secure a masters in business administration, according to the U.S. Department of Education. And if last year's numbers hold up, about a quarter of that group are expected to seek jobs in finance, according to the Graduate Management Admissions Council, a nonprofit education organization that oversees the Graduate Management Admission Test.

Among the group is Aziz Khan, an MBA student at Ohio State University's Fisher College of Business who will graduate this June.

The Akron, Ohio, native has yet to find a job, but hopes to find work as a buy-side research analyst. Before entering school, Khan spent 5 years working in asset management and retirement planning at the Ohio regional banks KeyBank and Fifth Third Bancorp.

The 28-year-old Khan said he remains hopeful he will secure something through networking and with help from the school's career center, but he's starting to see the nervousness spread among his fellow classmates.

"I think everybody is just guarded with the economy the way it is," said Khan. To top of page

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