Finance Is Still a Good College Choice

I am indebted to AnnaMarria Andriotis for a blog published on www.smartmoney.com,   “5 College Majors that Can Help You Get a Job,” on August 25, 2009.

Because of the crash of 2008; especially with money being tight, a lot of people who are going to college may think that finance is no longer a good career option.  This is not so; however.   A finance major is still a good career move.

While it’s true that the major Wall Street firms are not hiring at the pace they once were, Wall Street is not Main Street.   There are still career opportunities in Main-Street banking.  The mid-sized and small-sized banks are still hiring as are credit unions.   These institutions were not involved in the risky things that the Wall Street firms engaged in though the Dodd-Frank financial law has hurt small banks because of the costs involved in the massive new regulations that have been added.  

What the Wall Street firms did to affect them so acutely and which led to the crash was to purchase bundled mortgage packages as investments.  They then used these as securities to borrow against for expanded business activity.  The problem was too many of the mortgages were bad and this made them toxic as assets when this was found out.   The firms with these bundled mortgage packages then had limited assets to turn fluid when money was needed to settle accounts.

Think of it as buying an uninsured house that had been burned down which you are using as collateral for a line of credit.  How do you get cash out against your line of credit when the bank inspector finally comes along and notices that you only have smoldering ruins on your property? 

Local banks were not involved in this to the extent that Wall Street was.  They were forced by the government to make bad loans to people with bad credit for home purchases; true, but their other assets were still strong because they were not purchasing the bundled packages of mortgages like Wall Street did. 

Like with a bowl of apples, you can have one apple that is bad and sort around it.  What happens when you have the same proportion of bad apples in a field of apples, and you make apple sauce out of them?  A lot of stomach aches.

A reason an education in finance is still a good bet is that every company of any significant size has to have financial officers.  From risk analysts to controllers to chief financial officers, the number of jobs needed expands as the economy expands, and the economy right now is coming out of the recession with money flowing in from Europe and soon Asia as the United States is still viewed as a safe haven.

One irony of the Dodd-Frank law which I mentioned and which many experts feel hurts bank hiring because of the drain on resources it causes with its requirements is that it has opened up jobs for accounting majors in related financial fields.  It has opened up doors for auditors to enforce laws and for compliance officers to make sure their banks comply with the law. 

So even in hard times, a finance degree with the hard work needed to graduate can pay off.