John Chrin ’85, managing director and co-head of mergers and acquisitions (M&A) at JPMorgan Chase’s Financial Investment Group, said Wall Street will need to reinvent itself as it navigates through the current financial crisis.
Chrin spoke about Wall Street and the congressional bailout this past Saturday during the Lehigh M.B.A. program’s annual Alumni Day. “We have a ‘crisis’ somewhere, globally, every three or four years, so the fact that we have a new one really isn’t all that unusual,” he says. “What is unusual is the magnitude, and the severity, and the global nature of what is taking place at this point."
Highly regarded among the financial community, Chrin has played a prominent role in the rescue of Bear Stearns by JPMorgan, the acquisition of Washington Mutual by JPMorgan, and the mergers of JPMorgan with Bank One.
But despite that experience, Chrin and few of his colleagues anticipated the magnitude of the financial crisis and the impact it’s had on markets worldwide. Within the past two months, the United States has had to confront the collapse of Freddie Mac, Fannie Mae, AIG, Lehman Brothers, and Merrill Lynch.
The markets have responded accordingly. Before posting the largest plunge in recent history, the stock markets rose and fell over the past two weeks. Today, however, the U.S. stock markets slumped sharply and the Dow Jones Industrial Index dropped below the 10,000 mark for the first time since October 2004.
Chrin gave a thorough review of the collapse, beginning in March 2007 with the bankruptcy of New Century and the beginning of the sub-prime mortgage fall-out. That eventually led to the most significant event over the past two years: the March 2008 rescue of Bear Stearns by JPMorgan Chase.
“We hit a brick wall,” said Chrin. “It was an unbelievably historic event because it was the first time the Federal Reserve had to intervene to save an investment bank.”
Lax regulations, especially regarding liquidity, helped contribute to the crisis. Complacency and greed were contributing factors as well, he said.
“The financial system as we know it—the plumbing, in terms of moving credit, having banks lend to each other, has frozen up. And the Treasury is trying everything it can, along with the Fed, to get confidence back to the system,” he said.
Chrin also reassured his audience—many of whom were M.B.A. students concerned with the direction of the financial services sector—that Wall Street still needs good recruits.
Finding the right job, though, could be a little more difficult.
“The most important thing I heard from John is that Wall Street will continue to hire, but you might need to get a little more creative, be a little more entrepreneurial in your spirit,” said Tim Denning, president of Lehigh’s M.B.A. Association who is in his last semester in the program.
“But hearing him say, ‘If you’re diligent, if you stick to it, then good things will happen’ … that was reassuring.”
Disclaimer: The opinions expressed by John Chrin do not in any way represent those of JPMorgan Chase.
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