The unexpected trading loss at J.P. Morgan may be helping fuel the growing interest among financial services firms in hiring employees experienced in compliance issues such as the Volcker Rule.
Wall Street Services, which specializes in placing consultants, has gotten at least five orders for project managers and business analysts familiar with the Volcker Rule since the J.P. Morgan story broke, according to Peter Laughter, the company’s president. The jobs pay between $80,000 and $140,000 per year depending on experience. Ironically, one of the criticisms of the Volker Rule is that it will cost jobs.
Efforts by the financial services industry to fend off increased regulation will face an uphill battle given that J.P. Morgan CEO Jamie Dimon has said that the Volcker Rule may have helped prevent some of the company’s trading losses. Adding to the uncertainty is the presidential election, the outcome of which will have a direct impact on the outcome of industry regulation.
Weakness in Risk Management
“The J.P. Morgan debacle was the result of a weakness in risk management,” Robert Pestreich, managing director at Harrison, Stone & Associates, tells eFinancialCareers. “People became complacent. This just woke them up again.”
Around a dozen or so postings done in the last month mention the words “Volcker Rule.” In theory, the rule, which is designed to prevent banks from taking undue risks, is supposed to go into effect July 21st, though experts say that’s unlikely to happen. The financial services industry has repeatedly argued the rule is unnecessary and overly burdensome.
Volcker Rule Difficult to Implement
“…Regulators will not be able to provide advance guidance, as required by the law, regarding the myriad interpretative issues raised,” writes attorney Edward G. Eisert in Orrick Financial Industry Alert. “The principles underlying the Volcker Rule may be relatively easy to state, but its implementation is very difficult because it is such an ambitious piece of legislation.”
The trading losses at J.P. Morgan don’t appear to have triggered an exodus from the bank because “at the end of the day, it’s one of the most stable and best-run” Wall Street firms, according to New York recruiter Russ Gerson. So far, the job losses have been minimal. Chief Investment Officer Ina Drew has resigned and Dimon has resisted calls to follow suit.
Recruiters caution that the hiring climate is turning cautious because of the faltering economic recovery and the presidential election. This may have the biggest impact on jobs associated with mergers and acquisitions and raising capital. When it comes to hiring, they want to take as few risks as possible.
A Need to Hire
“Uncertainty is a great friend to consulting projects,” Laughter said, adding that many jobs that had been filled by regular employees are now being filled by contractors. “There is a need to hire but a reluctance to do so.”
Many financial professionals, who have survived bruising rounds of layoffs, are staying put for now even if they want to change jobs. That means those who are in the job market need to set their expectations low.
“Compensation across the board continues to come down dramatically,” said Gerson, CEO of the Gerson Group, in an interview, who cautions job seekers that they may have to settle for a less than an ideal role. “Institutions are being cautious. They are being cautious because the climate is unclear.”
Steve Potter, managing partner at the recruiting firm Odgers Berndtson, echoed Gerson’s views. "Resumes flood us from all quarters on the Street ... but interestingly, nobody is moving,” he tells eFinancialCareers. “Guarantees are a thing of the past and I think people are happy to be employed ... even if they are not happy with their particular circumstances.”