By Dan Fastenberg
One of the secrets of finance is that the banking world has a history of working in a lot of ways like a basketball league. You may be a star, but your killer jump shot barely matters if your team is in last place. Or to put in actual terms, what bank you work at is as important as your analyst skills. So if you're lucky enough to be one of the premiere bankers, you can just change teams, or banks, when fortunes fade.
That fluidity in the finance world may however be coming to an end, or so says a new report from Reuters. "There are plenty of resumes going around in the market right now, just not too many takers," Joe Neitham, a recruiter at TRC Group in Singapore, told the news agency. Just four years ago, when the volatility arrived on Wall Street in the wake of the financial crisis, its course was unpredictable. And its contours have already changed, Reuters says. When Lehman and other giants came crashing down, there were as many finance houses, like Barclays, that were then seeing golden days, going on "hiring sprees" in the first few years of the financial crisis.
The dynamic of 2011 is quite different, the report says. If banks aren't trimming their rolls, they certainly aren't hiring anymore either, Reuters says. In other words, no bank can speak of flush times. One could look to Asia to get a sense of the new stop sign that has taken over on Wall Street. Indeed, Asian finance was a bastion of prosperity during the worst of America's finance woes, and the securities sector there grew from 42,000 employees in 2007 to 55,000 at the end of this September. Among the Asian banks that were once outlets for hiring that are now going forward with a no new hands on deck policy is the Japanese financial holding company, Nomura.
Observers of Wall Street have tried to come up with explanations as to how some banks were up until this point able to see sky high returns even as global finance confronted its worst crisis since the Great Depression. And many have highlighted the popular Wall Street policy of maintaining skeleton crews, keeping staff overhead as low as possible to boost profits. It may be that all banks are now catching on, creating the new dynamic described above. Regardless, finance chieftains have defended the no hiring policies by highlighting the so-called "uncertainty" they are operating under, thereby disincentivizing hiring. And among the issues raised by Wall Street executives in defending the lack of hiring are the new regulations introduced by the 2010 Dodd-Frank Wall Street Reform Act.
Among the regulations introduced by Dodd-Frank is the mandate that banks keep more money in reserve so they need not look to Washington for a bailout in the event of massive crisis. This policy was also intended to halt the riskiest of trading. The new framework has drawn the ire of bankers, who say our capitalism must allow for such trading. For his part, former Sen. Chris Dodd, who sponsored the bill, is wearing the oft-sounded rebuke of his bill as a badge of courage.
"I should be flattered, I suppose," he told NBC's Meet the Press online program "Press Pass" on Friday. "I don't know of anyone who wants to go back to the fall of 2008."
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