Imagine being a summer intern at a company that was getting slammed by huge losses, laying off hundreds of workers and even subject to rumors about its survival.
Welcome to Wall Street, 2008.
"Days when there’s bad news, it’s scary in the office. Everyone’s in panic mode," said one summer intern at Lehman Brothers, who chose to remain anonymous because he hoped to secure a full-time position with the company. "It certainly puts the thought in your mind — Do I really want to work for a firm that keeps laying people off?"
More than 60,000 jobs have been shed on Wall Street since the start of the credit crisis a year ago, Reuters estimates. And though the atmosphere has certainly been grim, many summer interns interviewed said they were taking the upheaval in stride.
The Lehman intern, for instance, said the financial crisis hasn’t drastically changed his mind about a career in investment banking, although it has made him think twice.
The Wall Street firms themselves aren't giving up on the interns either. Instead of cutting the program, as they've done during previous downturns, smart and savvy firms are keeping a tight grip on their interns, said John Challenger of outplacement counseling service Challenger, Gray & Christmas.
"No company can afford to cut its internship program," he said. "You’d really have to be desperate because [they] are the future."
Many investment banks learned this lesson the hard way when they released the majority of their interns during the 2001 financial crisis — only to find themselves severely shorthanded after the economic rebound, Challenger said.
As most Wall Street firms offer full-time positions to 75 percent or 80 percent of their interns, the programs also serve as a "critical pipeline" to upper-level management, said Elizabeth Wamai, head of campus recruiting for Merrill Lynch. If done away with, the firm would be left without any vice presidents in five years time, she said.
Both Goldman Sachs and Merrill have about the same number of interns as in previous years, according to Wamai and a Goldman Sachs spokeswoman, but they declined to give specific figures. Neither firm plans to significantly shrink its program, no matter what the state of the economy, they said.
And despite severe industry write downs, neither Merrill Lynch nor Goldman Sachs has considered lowering or eliminating intern pay as a cost-cutting measure, the spokeswomen said.
Although this might sound counterintuitive in a struggling sector, the benefit of exposing bright college students to your business significantly outweighs the cost of a first-year salary, off which most Wall Street interns’ pay is based, Challenger said.
"They need young talent that has come to know the company," he said. "You can’t just think about 2008."
But just as companies can’t only think about 2008, neither can interns. In April, Celent research and consulting firm predicted that the U.S. banking industry will cut up to 10 percent of its workforce — 200,000 jobs — in only 12 to 18 months.
Even though they’re in no immediate danger, the mass layoffs have caused some college students to second-guess their post-graduation lives on Wall Street.
The Lehman intern said that co-workers told him that during the firm’s first round of layoffs, employees would pick up the phone, walk out of the office and never come back to work.
A representative for Lehman Brothers was not available for comment.
One Wall Street intern, whose company also underwent a recent wave of layoffs, said he knew how volatile the industry could be before he decided to pursue a job with an investment bank.
"That’s just how the business goes," he said. "That’s why they pay you so much — because you have absolutely no job security."
Bear Stearns interns faced a different challenge when JPMorgan Chase acquired the company earlier this year.
It only kept about 60 percent of the struggling bank’s 600 interns and full-time employees — 300, respectively — who were expected to join the company prior to the merger, said Brian Marchiony, a media relations representative for JPMorgan. That meant students whose internships fell in departments already filled by the firm lost out.
But for one intern at Goldman Sachs, working on Wall Street has actually built his confidence in investment banks, he said. As Goldman’s shares have only depreciated about 17 percent in the past year, compared with Merrill’s 49 percent and Lehman’s 74 percent, he considers the firm to be a leader in its sector, he said.
He has no doubts that Goldman, and the investment banks themselves, will bounce back.
"I know that the financial industry will always be here," he said.