Banks Will Survive Wall Street Stampede

By Nadler, Paul S. | American Banker, July 14, 1986 | Go to article overview

Banks Will Survive Wall Street Stampede


Nadler, Paul S., American Banker


Banks Will Survive Wall Street Stampede

As Wall Street and the investment banking community continue to stress their new areas of endeavor, notably mergers and acquisitions, buyout programs, initial public offerings, secondary offerings, and other phases of corporate finance, one can wonder what this all means for the American economy and American banking in particular.

Certainly we have seen the spotlight of publicity switch from banking to underwriting and investment banking. And as I tried to indicate in a column on June 23 ("Most Banks Won't Be Bitten by Wall Street Bug,' page 4), the public sometimes thinks that if a bank is not involved in merchant banking and underwriting it is not in the 20th Century--something that is patently not true.

But as we see Wall Street become more and more aggressive and develop newer programs, one can wonder what the lasting implications are for the rest of the financial structure, the banks in particular, and for the American economy.

One point is clear. Wall Street is becoming an ever more important siphon for the best and brightest in financial talent. How can a person graduating from a good college with a top record or coming out of a prestigious MBA program be happy with the starting salary that a bank is willing and able to offer, when a top Wall Street house can double or even triple this, after bonuses are included? Thus we see that fewer and fewer of the top students are going into banking, or even into consulting, which used to be the preferred first job for many top "fast track' students. They are heading for Wall Street and are helping make corporate finance into the leading area of financial activity.

This is not to say that the fast track students are always the best. There are certainly enough good people to go around. And many bankers and new recruits look at Wall Street and feel that this continuous hype of mergers and acquisitions, interest rate swaps, leveraged buyouts, initial public offerings, and the like cannot last. Wall Street goes in cycles, and there are times when the industry is just as deeply in the dumps as it is high in the clouds today. Thus some of the better graduates are looking to banking as a more stable occupation and feel that the benefits they are giving up by not going to Wall Street now might disappear when Wall Street has its next era of sluggish business.

Be that as it may, one cannot but conclude that the talent that has been drawn to Wall Street underwriting and investment banking has changed the face of America. To many top students, banks look more conservative and less propitious as employers than they used to. …

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