Friday, April 30, 2010

Networking: It's Not Who You Know, But Who Knows You

Join us for a Webinar on May 5

Space is limited.
Reserve your Webinar seat now at:

In this webinar, Dr Benjamin Ola. Akande will offer sage advice on the most productive and effective way to network for success. The presentation is sure to be filled with great antidotes, compelling stories and valuable take-a-ways such as “Find meaning in every conversation.” Dr. Akande concludes this presentation with the advice to “remember that networking is not about who you know, but who knows you.”

Dr. Akande is the Dean of the George Herbert Walker School of Business & Technology at Webster University.

This event is brought to you by the Consortium Finance Network, a special interest group of The Consortium for Graduate Study in Management.

Title: Networking: It's Now Who You Know, But Who Knows You

Date: Wednesday, May 5, 2010

Time: 5:00 PM - 6:30 PM CDT

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP, 2003 Server or 2000

Macintosh®-based attendees
Required: Mac OS® X 10.4.11 (Tiger®) or newer

Wednesday, April 21, 2010

The Big Short: Sequel to Liar's Poker?

"The Big Short." The book by author Michael Lewis that has raced to the top of the New York Times best-selling list only a month after publication. The book many in finance are talking about over the last week. The book that has become a must-read after last week's Goldman Sachs allegations by the SEC--if only to understand better CDO's and CDS's tied to mortgage markets. Collateralized-debt obligations. Credit-default swaps linked to subprime loans.

Several weeks ago, when the financial press hinted at the new book, one had to wonder what else was there to say or write about regarding the financial crisis. What could possibly be Lewis' spin on the collapse of mortgage markets and the subprime debacle after a dozen or so books have already attempted to pontificate over what happened in 2006-08?

In his epilogue, he acknowledges he thought of doing a soft sequel to his best-selling book "Liar's Poker." That book chronicled his experiences as a junior bond trader at Salomon Brothers. It reached the top of best-selling lists, describing with candid humor the sometimes-vulgar, wealth-generating culture of trading bonds at a major investment firm. That book, at least among finance types, is regarded a classic. MBA students today, who were barely toddlers when it was published, still discuss it or put it on their summer reading lists.

This book, "The Book Short," is "Liar's Poker" with a 2010 twist. In the 1980's, Lewis was a player and participant. In 2010, Lewis is an outsider--older, distant, and more confident in his survey and assessment of what happened in the subprime debacle. Lewis' prior stint on Wall Street gives him an advantage to explain the daily pressures, grind and intoxication of profits in derivatives trading. He has authored many successful books (including "Blind Side" and "Moneyball"). This experience and special skill allow him to tell a polished story and keep his readers intrigued, no matter the subject--even if the subject is shorting markets via the credit-default swaps.
Lewis tells how a handful of traders and fund managers painstakingly made hundreds of millions by betting on the collapse of the subprime mortgage market. Did they have special insight? Did they do proper homework or analysis? Did it take a special, neurotic character to forecast doom? Or were they just plain lucky?

It was as if he picked up decades later where Liar's Poker ended and described a more advanced, more insane (to him) chapter in bond markets--CDO's and CDS's in subprime loans. Or get this: synthetic CDO's, based on counterparties taking different sides in a credit-default swap tied to subprime mezzanine bonds linked to subprime loans.

If that doesn't make sense immediately, then some second-year MBA finance courses can delineate it mathematically. Or you can read Lewis' book, a primer on CDO's and CDS--without the math, without the fragile, bewildering deal structures, and without the bell-shaped statistical curves. He describes CDO's as a multi-floor office tower, where the sludge was supposed to be in the basement--not on the middle and top floors (where it turned up). At his best, he describes the opaqueness and whims of the market, the day-to-day "marking to market," the collateral required to maintain positions, the ugly pricing disputes, the highly paid dealers, panicking investors, and the general empty feeling that nobody is overseeing it all.

If you want to understand thoroughly the Goldman Sachs Abacus transactions the SEC has targeted, read this book.

This sequel is not a reflection of a disenchanted twenty-something trader. It is the wisdom of an informed outsider who decided to take a peek at his old world. Sardonic, cynical, drawing humor from chaos. Lewis explores motivation by greed, but zooms in on most people's disregard of the possibility that the worst case can happen.

The actual story centers around three disillusioned investment groups who aspire to find a way to bet their convictions that the mortgage markets will collapse at some point in the future. Meanwhile, they watch their positions, suffer anxiety attacks, and fend off investors.

Lewis explains derivatives with parables and analogies and tries to show how personalities and behavior can move markets. He describes the market with a talent to amuse and make any CDS pricing dispute interesting.

With Goldman allegations under watch for the next several months, Lewis may need to add a chapter or two. He's doing so with regular appearances in the financial media to sell the book and to present the chapter he would have written.

Lewis says there will surface more CDO and CDS deals (subject to SEC investigation or presented to the public for similar scrutiny) that will get headlines or be subject to public backlash.

And he knows he'll need to add not one, but two or three more chapters in the book's inevitable second edition.

Tracy Williams

CFN on Campus: Countdown to Summer

Consortium students across the country have reached that point where they can take a breath, acknowledge what they've accomplished during the year and start the steady countdown to graduation or summer.

Summer internships, summer respites before starting new jobs, new opportunities and the Consortium Orientation Program for yet another new batch of Consortium students are just around the corner.

For Consortium students in finance, 2010 has been more promising and more upbeat than the uncertainties and confusion of 2009. Many are quick to say we aren't quite there yet--the good old days when MBA students might need two hands to count the number of offers and opportunities or when some were astonished by sign-on bonuses and starting compensation. In recruiting, it's still a battle, a hard, long game to endure from the moment school starts right up to spring break.

This year, however, many students accomplished the goals they set during the first week of the school year. Consortium finance students will be interning at major financial institutions everywhere and will redirect their school energies into turning those internships into full-time offers by September.

Consortium interns this summer will be at JPMorgan Chase, Deutsche Bank, Barclays Capital, Credit Suisse, Goldman Sachs, Bank of America/Merrill, and UBS. Most of these will be in investment banking and private banking roles.

As in previous years, because sales & trading groups at major banks seldom sponsor formal internship programs, few students are heading into that direction, although some maintain interests. The same applies to hedge funds, private-equity companies, or small asset-management firms. They don't disregard MBA candidates; they just tend to hire on a one-off basis.

Some students will be a smaller banking boutiques, and some will use the summer to explore something different--e.g., energy companies, industrial companies in corporate finance, or non-profits. A few Consortium students will split the summer--working for different companies or working in two different parts of the country--to explore more what they might want to do in the long run.

And some decided this is the best time to take an international assignment. Instead of studying abroad for a few weeks, why not work 10 or more weeks in a different country or learn another language, culture and financial system? One Consortium finance student, Aaron Barrera of Indiana, for example, will be in Jakarta, Indonesia this summer.

Some Consortium students have already begun to prepare to convert those internships into full-time offers. No student wants to be caught unaware where he or she stands by the eighth week of the summer, still wondering whether there is a shot of getting that offer.

At major companies and financial institutions, the odds work in the students' favor. Their objective is to hire as many as they can for full-time spots, if only to reduce the burden of having to hire on campus in the fall. Yet they want to make sure they made the right choices among the interns.

As always among MBA finance students, they want to be assured everybody has first-rate technical skills. They assume MBA students are competent technically, but hope they hired those who are technically strong. Thus, MBA interns ought to find every opportunity to prove how polished they are. So while there will be the usual social events to meet senior managers and after-work cocktail gatherings to impress each other, MBA interns should leap at the chance to work on projects, deals, presentations, and research to show technical competence.

Also, they shouldn't wait to solicit feedback or find out how they are faring. The 10 weeks fly by swiftly. Sometimes time goes so fast that students find they didn't get many chances to work on projects or get proper feedback. At worst, they don't want to find themselves in situations where an end-of-summer selection committee is struggling to figure out what they accomplished, how they proved themselves, or who they are.

MBA interns, therefore, help themselves by reaching out to mentors and supervisors regularly, by taking initiative to work on projects or participate in deals or research whenever possible, and by asking managers often, "How am I doing?"

Second-year Consortium students, on the other hand, are still climbing to the surface after the impact of the financial crisis. Opportunities the past two year evaporated, and they couldn't get the right internships to channel them into coveted full-time spots--because offers were scarce. Most have survived, have turned their eyes to Plan B, have made the best of the abysmal circumstances, and will, in fact, be headed off to solid full-time roles all over. This year's graduates will be at JPMorgan Chase, Citi, Standard Chartered, the Federal Reserve, Bank of America, and more.

Now is the time for this class to ease toward the finish line and take some of those fascinating courses they couldn't get to last year: Ethics, strategy, real estate, venture capital, entrepreneurship, portfolio analysis, derivatives, trading analysis, market competition, or financial regulation.

One Consortium second-year student, Paul Ababio, at NYU-Stern this spring organized a trip to Africa to Tanzania to explore that country's economic and business prospects. He and other deputies led 80 MBA students who studied marketing, operations, program management and human resources during their time there. They visited Dar es Salaam, Zanzibar and other sites and met with leaders from financial institutions.

Ababio's trip proved to be one of the most popular and successful spring excursions at Stern, and he expects the school will continue the program to Africa next year, when he has graduated. After graduation, Ababio will enter the management-associates program at Standard Chartered. After training in Singapore, he will work in the bank's office in Ghana.

Tracy Williams

Monday, April 19, 2010

California Dreamin'--MBA-Style

The Consortium continues to sprout and spread, especially on the West Coast. Days after announcing the return of UC-Berkeley to a growing list of Consortium schools, it announced this week that UCLA's Anderson School of Management will become the Consortium's 17th.
UCLA joins cross-town rival USC-Marshall and Berkeley's Haas School in the Bay Area, forming the Consortium's enlarged footprint in the West.
In just two years, the Consortium has added four prominent business schools, giving prospects that many more options, making the Consortium even more attractive to top talent, and making it near impossible for the best and brightest to ignore the Consortium when it comes time to apply to top b-schools.
Yale and Cornell-Johnson are the two other new Consortium schools. Along with Dartmouth-Tuck, they add "Ivy League" flavor to Consortium offerings.
Just like all other Consortium schools, UCLA offers a top-notch full-time program, a worldwide network of alumni, a demanding core of first-year courses, and prized, experienced faculty. But UCLA offers, too, its own brand and uniqueness. It's not necessarily USC in Westwood or UC-Berkeley in SoCal. The Anderson school features special programs and centers in finance, international business, media entertainment and sports, and real estate.
Alumni around the world total over 35,000. One of its most prominent is Larry Fink, CEO of BlackRock and a prominent spokesman and figure the past few years, as the financial system recovers from the crisis. Fink contributed $10 million to what is now the Fink Center of Finance and Investments. (He will be, in fact, speaking to students April 22 on campus.)
UCLA's full-time MBA program is moderate in size--about 360 students in the first-year class. Typically over 3,000 apply for those slots. Its joining the Consortium reaffirms its long-time commitment to diversity; its current ranks prove it. About 19% of students are minorities, and 34% are women, 33% international.
Students have broad interests. Like other top schools, many have come from or are interested in finance, consulting and high-tech. At UCLA, large numbers of students have interests and experiences in the public sector, non-profits, and (yes, not surprisingly) entertainment and media.
Anderson is led by Dean Judy Olian, who happens to have earned her Ph.d. from a Consortium school-Wisconsin.
Networking Webinar
The Consortium Finance Network will host its fourth webinar Wednesday, May 5, at 6 pm. EDT.
Networking continues to be a popular topic. Students, alumni, and even experienced professionals are always looking for ways to be effective at it and to do it in natural, comfortable ways--whether they are transitioning into other jobs, exploring ways to grow or simply looking to connect to help others. There are right ways, awkward ways, superficial ways and effective ways. There is, too, something called netiquette--networking gracefully and courteously, networking without being a burden to others.
Dr. Benjamin Akande of St. Louis will present the networking topic, "It's Not Who You Know, But Who Knows You." He will show what works, what doesn't, and how to make communication meaningful. Dr. Akande is the dean of the business school at Webster University.
For those interested in participating, reserve a spot now by registering via CFN's Linkedin site ( For more about Dr. Akande's background, see
Tracy Williams

Tuesday, April 13, 2010

Dear Financial Institution Shareholder....

This is the year when investors and the public will grab the company annual report and read carefully the CEO's annual letter to shareholders. Especially those at major financial institutions.

How will they explain the crisis? How will they show how they survived it? How will they assess their firms' performance during the crisis? How did they treat employees and loyal, experienced staff?

How will they respond to the public backlash--fair or not--that large banks were bolstered by a life net offered by the U.S. Government and that large banks have returned to old habits and ways of compensating themselves excessively? What do they think of impending financial regulation and what will they support (and in what ways will they impede it)?

This will be the year when CEO's choose to escape the normal format of preparing a shareholder letter. Normally CEO's use the pages to describe performance in each business line, explain specific events that might have caused a decline in sector revenues or factors that helped spur sales, and present a general, often vague outlook on the periods to come.

This year there's much to address, and CEO's know they will be closely read and know investors and the public want to hear from them in a clear, lucid, matter-of-fact way.

Many in the public want to see an apology in some form. They want to see an expression of regret for the roles banks played in contributing to the asset bubble and extravagant risk-taking that led to the crisis and jeopardized the system.

And apologies have been offered--whether in sessions before the financial-inquiry commission in Washington or in recent letters to shareholders. Apologies alone, however, don't transform the system or provide assurance that the next crisis doesn't loom in the years ahead. A polished, logical letter to investors helps.

In good years, CEO's beat their chests and devote significant portions of their letters to people management and, if space permits, diversity. In a year after the recent turmoil, after financial institutions were fighting for their lives and after diversity took a backseat, in shareholder letters, CEO's are hinting at turning up the volume of diversity again.

Matter-of-fact might describe Goldman Sachs' recently published letter to shareholders--staid, fact-based, conciliatory in some passages. CEO Lloyd Blankstein knew the letter would be reported, analyzed, and dissected in blogs, in the financial press, and in financial circles. He and Goldman president Gary Cohn decided it was best to focus on a few topics everybody will want to hear about. They present and explain them tersely and without much editorial emotion--as if they were presenting a pristine, fact-based argument. When it could have been 15 pages, it was just eight.

Goldman's letter focused on a handful of topics: its client-based businesses, it vast liquidity pool ($170 bn), its compensation policies, and its careful descriptions of what happened in its ties with AIG.

First, it explained all its businesses--from asset management to commodities trading--in the context of accommodating clients. It wants to dispel the notion of being a glorified hedge fund or a vast private-equity organization. The letter several times reminds readers of Goldman's client-oriented heritage and its "client-based franchise." Goldman built its tradition based on a near-maniacal regard for clients and an obsession to avoid conflicts of interest with them. In its 2010 letter, it re-commits to its long-nurtured tradition.

Second, it knew it needed to address compensation: "We have not been blind to the attention on our industry and in particular Goldman Sachs with respect to compensation."

For fans of financial engineering, the letter painstakingly explains its trading ties with AIG, its management of AIG risks, and its indirect receipt of TARP funds, based on AIG-Goldman transactions (credit-default swaps, securities-lending-related, collateral calls and collateral disputes, etc.).

To its credit, Goldman's letter discusses recent promising initiatives on its support of women in business and small business in general, outlining related programs to come.

At JPMorgan Chase, CEO Jamie Dimon wrote a passionate letter in first person. His was 30-plus-page finance essay, written in the no-holds-barred, free-form style Dimon is known for.

He says banks have been subject to "demonization." The letter is a meticulously crafted rebuttal, an argument that some banks survived intact and for good reason. He writes the letter, knowing Congress and business leaders will read it word for word and will be anxious to see how the industry's shrewdest, toughest manager describes what happened and where do we go from here.

In simple, Dimon-like language, he decided it was important to explain "what we do." He wrote, "I will focus on what we as a bank actually do, which seems to be so often misunderstood." For MBA students and alumni pursuing career opportunities at JPMorgan, these passages are invaluable. He tries to show JPMorgan is more than a band of millionaire investment bankers. The "company," as he calls it, is 19,000 technology people and 80,000 operations people.

In 30-plus, easy-to-read pages, Dimon provided mini-essays on many topics: the crisis, regulation (reviewing its faults during the crisis, presenting a dozen or so broad solutions), leadership (outlining a basic list of what leaders--including himself--need to be and do), and compensation (with reasons why it's complex at a large, diversified institution such as JPMorgan Chase). Dimon blames the crisis on "bad risk management" and regulators' lack of a blueprint to resolve the collapse of institutions.

On regulation, he offers his suggestions, but with little detail. He appears to be more bothered by "the lack of regulation clarity," which is "creating problems for banks and for the entire economy." In essence, let's know what the score is, so we banks can all move on.

The letter doesn't discuss diversity overtly. Instead Dimon focused on the breadth of the organization, on opportunities globally and on identifying talent to groom it and develop it in far better ways than in the past. For new MBA's, he says the bank needs to and will develop a more in-depth leadership program.

Goldman and JPMorgan took a cue from Warren Buffett, who set the standard long ago for using the shareholder-letter platform to explain his businesses, to highlight risks, to teach and show, and to provide a realistic, simple view of the horizon. Perhaps in years to come, we'll continue to see financial institutions fashion their annual messages similarly.

Tracy Williams

Thursday, April 1, 2010

Welcome Back, Haas

From 1993-2003, California-Berkeley's Haas Business School was--along with USC's Marshall--the Consortium's West Coast option. When prospective students applied to the Consortium and expressed an interest in going to school in California, Cal-Berkeley was an attractive choice. Moreover, it was the hey day of dot-com investing; MBA students wanted to be near Silicon Valley, wanted to work for upstart Internet firms, wanted to dive into private-equity ventures, or wanted to start at banking boutiques that focused on new ventures.

The dot-com craze, as we know, dimmed or righted itself during the same period, although the Bay Area remains a hub for venture investing, Internet enterprises, and innovation. But it was during the time, Cal-Berkeley (Haas) decided to withdraw from the Consortium. Proposition 209 in California prohibited it from giving preferential treatment on the basis of ethnicity or sex, and its dean then pulled Haas off the Consortium roster.

In ensuing years, the Consortium has reaffirmed its commitment to diversity in business, but opened its membership to all--permitting Haas, despite Prop 209, to rejoin the Consortium seven years later. (The Consortium announced its return this week ( It is the 16th Consortium school.)

Welcome back, Haas. (See photo above.)

Cal-Berkeley's return immediately gives prospective applicants yet another choice among many top-tier schools and yet another West Coast alternative. Over the years, applicants have been attracted to the Consortium for many reasons--the fellowship, the Orientation Program, the networking, the comaraderie among fellow students, the immediate tie-ins with sponsors, the geographies of specific schools, and, just as important, an entry into one of the nation's top business schools.

Haas being back gives prospects more reasons to apply to the program, more choices and chances to find the best fit within the Consortium umbrella.

Cal-Berkeley's business school has been around for over 100 years. It differs in some ways from other Consortium schools. But there, too, are similarities. It has a large undergraduate program (like Michigan and Texas), where schools such as Yale and Dartmouth do not. It has a large part-time program (like NYU), where many other schools emphasize the full-time graduate program. It sits on the east side of the Bay Area in the vicinity of a major metro area (San Francisco). In that way, it's similar to NYU (New York), Emory (Atlanta), and Carnegie Mellon (Pittsburgh).

It is a featured part of a prestigious public university (like Michigan, North Carolina, Virginia, Texas, Wisconsin and Indiana). And it has a friendly rivalry with another top business school nearby (Stanford)--like North Carolina (Duke) and NYU (Columbia).

Like almost all Consortium schools, it is considered top-tier, ranking respectably in just about anybody's ranking and considered highly desirable for those who want to be in the midst of Silicon Valley frenzy or who have grand ideas about entrepreneurship.

Prominent alumni include the CEO's or chairpersons of Adobe Systems, Intel, and Williams-Sonoma. Many top leaders of Wells Fargo and Bank of America, the latter once headquartered in nearby San Francisco, are graduates.

The full-time MBA program, where Consortium students have enrolled and will do so again, is modest-sized, about 240 in a first-year class chosen from over 4,000 applicants. About 28% of the current graduating class are women; 30%, minorities.

The school likes to boast of having Nobel laureates and past deans who have had major roles in economics or finance in previous presidential administrations.

Rich Lyons is the current dean and in his stint has instilled a renewed vigor and emphasis on diversity in all aspects of the school. Hence, getting back into the Consortium was a natural next step for him and all at Haas.

Haas joins Cornell and Yale, two other top-tier schools that joined the Consortium in recent years. Schools like Cal-Berkeley, Cornell and Yale (as well as the other prominent 13) make it harder and harder for successful applicants to turn down the Consortium offer and go elsewhere. Even more, the same slate of schools certainly make it unwise for any outstanding applicant not to think of the Consortium--no matter race, color, sex or ethnicity.

Tracy Williams