"The lesson of Buffett was: To succeed in a spectacular fashion you had to be spectacularly unusual.” That's Michael Lewis, well-known financial journalist, in his book, The Big Short. Wall Street has always drawn the bright, ambitious, and creative, but the finance industry is now struggling to fight battles on multiple fronts.
First, there are several industry changes that indicate finance is no longer as attractive a career path.
As far as thrilling careers go, working in the finance business used to be at the top of the list for many students. Managing (and making) millions of dollars while achieving personal satisfaction in an exciting, ever-changing environment? Sounds like a good deal. Lloyd Blankfein, CEO of Goldman Sachs, described the culture of his company as an "interesting blend of confidence and commitment to excellence, and an inbred insecurity that drives people to keep working and producing long after they need to."
The allure of the finance industry was easy to explain given the industry's corporate culture, the desire for excellence, and bountiful personal (and financial) rewards.
So what's going wrong today?
A few weeks ago, a Wall Street Journal op-ed by Terry Duffy, president of the CME Group, reported that Wall Street was no longer attracting the best and brightest students from Ivy League universities. Harvard, Yale, and Princeton all saw a significant decline in the percentage of graduating students pursuing a career in finance. Instead, more of these graduates were attracted to tech companies, leading Marketwatch to declare a "talent war" for graduates. It's "Silicon Valley vs. Wall Street," they argue. Even Harvard graduates that were looking for high salaries often chose consulting firms instead, Duffy said.
Duffy also brings up another point — the American public vs. Wall Street. The perception of financial managers and investment bankers as greedy has turned off many people from the industry. People forget that finance is about making business ideas possible, not about extorting naive Americans, says Duffy. "We need to demonstrate how the best bankers, traders and investors have not only talented minds but empathy and insight into what makes people tick — and the resources to help them prosper."
This mindset has been endlessly perpetuated by President Obama. He constantly refers to bankers as "fat cats," and his rhetoric often sounds remarkably similar to that of the "Occupy Wall Street" movement that sought to challenge financial greed and corruption through mass demonstrations and encampments.
And with the upcoming debt limit debate, there is a new foe for Wall Street — the Tea Party. Though the finance industry typically has considerable involvement in political decisions, this debate is showing otherwise. Members of the Tea Party, unlike most other Republicans, just don't listen to Wall Street's warnings about the debt limit.
The Tea Party has "no allegiance to K Street and Wall Street," says conservative activist Daniel Horowitz in Politico. "They were elected by passionate heartland conservatives of modest means."
A Wall Street that finds itself embattled at every turn is a Wall Street with a lackluster reputation, tougher competition for bright graduates, and diminishing political power. It seems Wall Street took more than a financial hit from the recession after all, and that should worry an American public that will depend on banks for home and new business loans.
Originally posted on The Washington Times Communities.