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Ntang
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Ashamed to be an Investment Banker? 21 Oct 2008, 10:46
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Sorry, I don't mean to sound (too) smug. But there's a good deal of sneering at us non-profit folks among banking types - like the dude at my info session at Stanford a few weeks ago who asked if I was a "do-gooder," and then burst out laughing.
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Ashamed to be an Investment Banker? 21 Oct 2008, 11:09
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Ntang
Sorry, I don't mean to sound (too) smug. But there's a good deal of sneering at us non-profit folks among banking types - like the dude at my info session at Stanford a few weeks ago who asked if I was a "do-gooder," and then burst out laughing.
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There are jerks in every walk of life. The best that you can hope to accomplish is to not be one yourself.
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Ashamed to be an Investment Banker? 21 Oct 2008, 11:52
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Oh come on. I-bankers were (are) rich and called themselves Masters of the Universe only half joking. Now their industry is in trouble and arts/journalism/whatever people are gloating. Wow, who would have thought.
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Ashamed to be an Investment Banker? 21 Oct 2008, 11:53
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terp06

There are jerks in every walk of life. The best that you can hope to accomplish is to not be one yourself.
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+1 from me
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Ashamed to be an Investment Banker? 21 Oct 2008, 11:57
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Yeah, but keeping your mouth shut and not kicking someone when they are down is the sign of a much bigger person. I guess in some cases that's just too much to ask for.
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Ashamed to be an Investment Banker? 21 Oct 2008, 18:32
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Just found this on digg..

https://www.splicetoday.com/consume/i-wo ... t-to-blame?

Quote:
Before assuming I am just another “greedy” Wall Streeter, there are probably a few things you ought to know. You might be surprised to hear that salaries on Wall Street are generally very low—so low that it might shock you given the tales of excessive wealth in the financial service industry. For most people working in finance, the bulk of their compensation is disproportionately represented by the year-end bonus, and this year bonuses are almost sure to take a major hit. (Indeed, it’s the bonuses that provide the eye-popping numbers for which Wall Street is infamous.) Keep in mind as well that quite often, a significant portion of the bonus consists of shares of the firm’s stock. And, like many other Americans, we have our own stock portfolios and our own 401(k) plans.
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Ashamed to be an Investment Banker? 22 Oct 2008, 16:51
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Nerdboy
Oh come on. I-bankers were (are) rich and called themselves Masters of the Universe only half joking. Now their industry is in trouble and arts/journalism/whatever people are gloating. Wow, who would have thought.
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Are the arts/journalism not hurting as well? I thought the arts are very much dependent on their wealthy clients and NYT/LA Times, other big papers are also announcing layoffs. These aren't industry specific "hard times"...
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Ashamed to be an Investment Banker? 23 Oct 2008, 02:23
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Not just the bankers....

https://dealbook.blogs.nytimes.com/2008/ ... f=business

In one email, an S&P analytical staffer emailed another that a mortgage or structured-finance deal was "ridiculous" and that "we should not be rating it." The other S&P staffer replied that "we rate every deal," adding that "it could be structured by cows" and we would rate it.



https://www.bloomberg.com/apps/news?pid= ... refer=home

An e-mail that a S&P employee wrote to a co-worker in 2006, obtained by committee investigators, said, ``Let's hope we are all wealthy and retired by the time this house of cards falters.''
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Ashamed to be an Investment Banker? 23 Oct 2008, 08:55
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kinda makes you wonder if being a ratings agency should be a legal for profit business. maybe that should be a government function like the referee at a sporting event.
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Ashamed to be an Investment Banker? 23 Oct 2008, 09:38
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Sleepy
kinda makes you wonder if being a ratings agency should be a legal for profit business. maybe that should be a government function like the referee at a sporting event.
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That solution would only ensure that they would do an even worse job rating than they are currently. It's a conflict of interest that is akin to public accounting, and unfortunately there isn't a better solution.
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Ashamed to be an Investment Banker? 23 Oct 2008, 09:50
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Well the biggest conflict of interest is how the firms get paid. They receive revenue from the companies issuing the bonds, which encourages 'shopping for a rating'. This is a terrible conflict of interest. One idea being tossed around is changing the revenue model to a subscription based service. Of course the mager CRAs have absolutely panned it, even though some smaller agencies are having success with it.
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Ashamed to be an Investment Banker? 23 Oct 2008, 11:19
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jb32
Well the biggest conflict of interest is how the firms get paid. They receive revenue from the companies issuing the bonds, which encourages 'shopping for a rating'. This is a terrible conflict of interest. One idea being tossed around is changing the revenue model to a subscription based service. Of course the mager CRAs have absolutely panned it, even though some smaller agencies are having success with it.
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I was referring to exactly this conflict of interest. If there were a way around it, however, I suspect the Big4 would've already figured it out, as I think the conflict is more serious to the credibility of their business.
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Ashamed to be an Investment Banker? 23 Oct 2008, 14:02
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jb32
Well the biggest conflict of interest is how the firms get paid. They receive revenue from the companies issuing the bonds, which encourages 'shopping for a rating'. This is a terrible conflict of interest. One idea being tossed around is changing the revenue model to a subscription based service. Of course the mager CRAs have absolutely panned it, even though some smaller agencies are having success with it.

I was referring to exactly this conflict of interest. If there were a way around it, however, I suspect the Big4 would've already figured it out, as I think the conflict is more serious to the credibility of their business.
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The Big 4 have no interest in resolving this conflict of interest. If they did they would go out of business.
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Ashamed to be an Investment Banker? 23 Oct 2008, 14:39
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jb32
Well the biggest conflict of interest is how the firms get paid. They receive revenue from the companies issuing the bonds, which encourages 'shopping for a rating'. This is a terrible conflict of interest. One idea being tossed around is changing the revenue model to a subscription based service. Of course the mager CRAs have absolutely panned it, even though some smaller agencies are having success with it.

I was referring to exactly this conflict of interest. If there were a way around it, however, I suspect the Big4 would've already figured it out, as I think the conflict is more serious to the credibility of their business.

The Big 4 have no interest in resolving this conflict of interest. If they did they would go out of business.
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Good point--let me be clearer in what I was thinking. More along the lines of...if this kind of conflict of interest could be resolved, it would have been in the Big5->Big4 situation. E.g. I imagine that through the creation of S-Ox, the PCAOB et al were deemed sufficient to keep the conflict in check.

Frankly, a more interesting question is, why do we need the rating agencies to exist? We don't have them on the equity side.
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Ashamed to be an Investment Banker? 23 Oct 2008, 14:46
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cougarblue
Audio
The Big 4 have no interest in resolving this conflict of interest. If they did they would go out of business.

Good point--let me be clearer in what I was thinking. More along the lines of...if this kind of conflict of interest could be resolved, it would have been in the Big5->Big4 situation. E.g. I imagine that through the creation of S-Ox, the PCAOB et al were deemed sufficient to keep the conflict in check.

Frankly, a more interesting question is, why do we need the rating agencies to exist? We don't have them on the equity side.
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Because they wedged themselves in there and they won't leave without a fight. :wink:
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Ashamed to be an Investment Banker? 24 Oct 2008, 11:02
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Sleepy
kinda makes you wonder if being a ratings agency should be a legal for profit business. maybe that should be a government function like the referee at a sporting event.

That solution would only ensure that they would do an even worse job rating than they are currently. It's a conflict of interest that is akin to public accounting, and unfortunately there isn't a better solution.
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I don't quite follow. If the agencies weren't able to make money for rating things, and instead some disinterested expert was setting the ratings, how would this be a worse solution? I can imagine some difficulty recruiting top talent to a non profit venture, but I don't see how, beyond this, theres a problem with having some regulatory body that only issues ratings exist rather than having ratings agencies increasing the cost of debt by taking out profits all the while "racing to the bottom" as described in the articles. (I assume this is what happens, but I don't actually know)
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Ashamed to be an Investment Banker? 24 Oct 2008, 15:55
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Sleepy
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Sleepy
kinda makes you wonder if being a ratings agency should be a legal for profit business. maybe that should be a government function like the referee at a sporting event.

That solution would only ensure that they would do an even worse job rating than they are currently. It's a conflict of interest that is akin to public accounting, and unfortunately there isn't a better solution.

I don't quite follow. If the agencies weren't able to make money for rating things, and instead some disinterested expert was setting the ratings, how would this be a worse solution? I can imagine some difficulty recruiting top talent to a non profit venture, but I don't see how, beyond this, theres a problem with having some regulatory body that only issues ratings exist rather than having ratings agencies increasing the cost of debt by taking out profits all the while "racing to the bottom" as described in the articles. (I assume this is what happens, but I don't actually know)
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Rating Agencies, even as for-profit enterprises, already suffer from not getting the best talent. How much worse would they be if they were gov't employees? Why do investors need an agency, disinterested or otherwise, to tell them something is AAA vs BBB? It's called due diligence and risk management, a lack of which has been a catalyst for the current credit crisis. I think the counter-argument to mine is that RAs actually decrease, not increase, the cost of debt for fixed income securities as a whole.
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Ashamed to be an Investment Banker? 27 Oct 2008, 00:34
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`Out of Control' CEOs Spurned Davos Warnings on Risk (Update1)

Oct. 24 (Bloomberg) -- Once upon a time, the World Economic Forum was the ultimate Wall Street jamboree.

Now, in the riptide of the worst financial crisis since the Great Depression, WEF officials and delegates say many of the chief executive officers who gathered in Davos, Switzerland, over the last five years didn't listen to warnings from their peers. Davos organizers also say they failed to play tough with the financial-industry bosses, opting to accept their funding and let them turn Davos into a rave-up for Wall Street excesses.

``The partying crept in,'' says Klaus Schwab, the 70-year- old WEF founder and executive chairman. ``We let it get out of control, and attention was taken away from the speed and complexity of how the world's challenges built up.''

[More at https://www.bloomberg.com/apps/news?pid= ... refer=home]
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Ashamed to be an Investment Banker? 28 Oct 2008, 02:09
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A degree in Finance would probably be the best option. You will have to be pretty sharp to get a job as an investment banker. You will also need experience. To really find out what is the best course of action for yourself, call an investment banker at his/her office.
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