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Let's play a little hypothetical game. Suppose that for the next 5 years, all the investment banks, mgt consulting firms, etc. all decided they weren't going to recruit at Harvard. Would that make the value of a Harvard education less? Would it drop in the ratings? Should it drop in the ratings?
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<p>I would say yes because in this country it is "follow the money." We have often discussed on CC on how paying for college is an investment. If those top paying companies stop recruiting at those top schools then the value of those schools would go down. At the same time, those top companies would never stop recruiting at those schools if they have the best students and receive the best education. It is no different than hospitality firms recruit from Cornell Hotel school, not Harvard, or engineering firms recruit from MIT, Caltech or Georgia Tech and not from Yale or Princeton.</p>
<p>It is similar to all the prep schools, the reason people are willing to pay 30,000+/year is to make sure their kids could get into top colleges. If top colleges should stop recruiting at those prep schools, then people would stop paying the tuition.</p>
<p>Anneroku, it's pretty ridiculous to say all of this was the fault of WS, no matter where the players did or did not go to college. Who held the gun to the heads of the millions who took out liar loans?</p>
<p>Amazing how happy everyone was with WS while stock and housing prices kept going up.</p>
<p>What's a nice Jewish boy like Madoff doing at the University of Alabama??</p>
<p>Oldfort - if I may, I daresay that some subcultures value "following the money" more than others, particularly those that are newer to this country and may have made tremendous sacrifices to help their children what they perceive as golden tickets to financial success.</p>
<p>In my hypothetical example, where the i-banks (etc) stop recruiting at Harvard -- not one IOTA of the classroom experience has changed. The same brilliant kids are having the same brilliant discussions, blah blah blah. So how would this affect the EDUCATION gotten at Harvard?</p>
<p>Pizzagirl - following the money has always been the American way, in other culture money does not necessary define your status in a society. If top paying firms (may not be ibanks any more) should stop recruiting from Harvard, then the same brilliant kids would go to different schools.</p>
<p>I just came back from a dinner party with some parents from my kids' school. Topic of the conversation was how the new head of college counselor is going to do this year. A nice Jewish father said for the kind of money he has paid for the school, his D better not end up going to ___(second tier LAC).</p>
<p>During the years of the dot com phenomena, it was tremendously difficult for ibanks to attract the top grads, they simply saw faster money in dot com companies. They went bust, the kids returned to the banks.</p>
<p>"Pizzagirl - following the money has always been the American way, in other culture money does not necessary define your status in a society. "</p>
<p>Some majors are more likely to lead to well-paying jobs than others. Is there anyone here who would say (for example), I'll pay full-freight wherever you like if you become an econ / business / pre-med / pre-law / engineering major, but I won't pay full-freight and I'm only going to fund a basic state school if you want to become an elementary school teacher? </p>
<p>Because I for one wouldn't differentiate the two, because I don't see education as "wasted" (or the money put into it as "wasted") if the kid doesn't follow a highly lucrative career path. Then again, that's precisely why dh and I HAVE worked so hard - that our kids have the options to do what they want to do, not what they think will give the most return on our investment.</p>
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it's pretty ridiculous to say all of this was the fault of WS, no matter where the players did or did not go to college. Who held the gun to the heads of the millions who took out liar loans?
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<p>hmom5, I actually do think most of this was the fault of Wall Street, and most of the players were Ivy grads. Robert Rubin (Harvard, Yale), Alan Greenspan (Columbia), and Larry Summers (MIT, Harvard) all opposed regulating derivatives and favored the repeal of the Glass-Steagall Act.
Of course, no one forced borrowers to take out these loans. But I believe the financial industry counted on luring unsophisticated borrowers who would be willing to take out ARM loans, etc., under the mistaken belief that banks wouldn't permit this if it was financially unwise.</p>
<p>Do you honestly think people sat there and thought, gee, this is OK because it's allowed? I'll just borrow seven times my income for my house and count on them not asking for documentation because after all, it's possible? </p>
<p>If you really want to believe the end user was naive, that I think you need to lay the blame on the mortgage brokers and commercial bankers who actively promoted these loans to them.</p>
<p>Just plain evenly distributed greed all around as I see it.</p>
<p>"Pizzagirl - following the money has always been the American way, in other culture money does not necessary define your status in a society. If top paying firms (may not be ibanks any more) should stop recruiting from Harvard, then the same brilliant kids would go to different schools."</p>
<p>So what's the point of a school to have good programs in (say) art history, music theory, philosophy, or other fields that typically don't lead to as high-paying jobs as economics, business, the sciences / engineering and perhaps politics / pre-law? Seems to me that if a school's rating "should" go down if its graduates don't go into the most lucrative fields, that the quality of those other depts doesn't really matter all that much. No?</p>
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hmom5, I actually do think most of this was the fault of Wall Street, and most of the players were Ivy grads. Robert Rubin (Harvard, Yale), Alan Greenspan (Columbia), and Larry Summers (MIT, Harvard) all opposed regulating derivatives and favored the repeal of the Glass-Steagall Act.
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<p>Don't forget Bill Clinton(Harvard), Schumer(Harvard).</p>
<p>Plus Barney Frank(Harvard), but he pushed a different instrument</p>
<p>And another famous Harvard grad, , Enron Schilling, eventhough he is not related to the mortgage mess but another mess that the general public has to suffer.</p>
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Do you honestly think people sat there and thought, gee, this is OK because it's allowed? I'll just borrow seven times my income for my house and count on them not asking for documentation because after all, it's possible?
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^ Yes, I do. It used to be that banks simply would not lend an amount that could not reasonably be paid back. I think that is the sort of advice and constraint most of these borrowers expected from their bankers. The whole borrowing/mortgage system is very confusing and mysterious to the average person, and even more so for most of these sub-prime customers.
I do blame the mortgage brokers and lenders, but Wall St. was also instrumental in allowing this sort of thing to flourish.</p>
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Just plain evenly distributed greed all around as I see it.
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I see it as greed on the part of lenders, but naive stupidity on the part of borrowers. I wouldn't describe borrowers as greedy, when they ultimately suffer the consequences by losing their home and/or going through bankruptcy.</p>
<p>This has been posted before but it's worth revisiting given that the subject has turned to liar loans. It's a must read for understanding the mortgage meltdown. No one emerges unscathed. Subprime lenders are "scumbags". The CEO of Moody's is "delusional". The CEO of Option One, the mortgage originator owned by H&R Block, was a "liar". The rating agencies are "morally bankrupt". The article is stunning.</p>
<p>I think what happened with WS is that everyone just wanted what was theirs and passed on the rest to the next stop. Yes, sleezy mortgage brokers enticed the uneducated and elderly into getting into mortgages they could not afford and then they bundled them all up and sold them up the food chain. There was no concern for the individual whatsoever and it was a me first mentality. No one is blameless in this current mess we face.</p>
<p>But I would hope that some schools would take this as opportunity to revisit the rules of ethics and expand on the idea that there are actually human beings behind every transaction.</p>
<p>The human capital theory of economics says that if you hire a guy with an education he should bring your company more money. How one values that education is mostly determined by what the guy can do for you. So if a company makes a good return on those they recruit from Harvard that's where they will return to. This is not to say there aren't great prospects at State schools, but there will be a higher concentration of potentially successful candidates at a Harvard or other top school. I know for a fact that Target only targets a few top schools for their top hires. They probably have a very good return on that recruiting and because it is a better stocked pond, they can go fishing far more often just by anchoring the boat and letting the fish come to them.</p>
<p>If a company ended up having an equal amount of success at Go U, well.. it would probably be cheaper for them but admittedly there is a personality type that fits with the top schools. </p>
<p>Not sure if this is making sense in the translation, but I honestly think it becomes a which came first the chicken or the egg kind of issue.</p>
<p>Anneroku, these "naive" borrowers were sophisticated enough to take outrageous loans and constantly remove the equity and refinance. Did some naive get caught up in this? Sure. Did most know exactly what they were doing? Yes.</p>
<p>We'd have to believe the average American was pretty darn stupid to believe they could afford a million dollar home on a $70K income. Because that's exactly what was going on in CA, Arizona, Vegas and the markets where it was truly outrageous.</p>
<p>HMom is absolutely correct. People were buying into homes with absolutely nothing to even prove they were who they said they were. We've all read about the foreclosure on the loan that when traced was made to a guy five years earlier who had been dead for 10!</p>
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It is one thing when the best-paid people seem to be the smartest and the most accomplished. Those who make much less may not like it, but the differential seems understandable. </p>
<p>It is another thing when those people are shown to have committed huge blunders that would have driven their companies out of business, and them into the unemployment line, but for government bailouts, The New York Timess Floyd Norris writes in his latest column.</p>
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These arrangements, struck privately by parties on both sides of a C.D.S. contract, have been extremely profitable to the Wall Street banks and insurers that traded in them. </p>
<p>Sellers of C.D.S.s spent years raking in premiums while underestimating or simply ignoring the possibility of rising defaults. Regulators let the market grow unchecked.
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Credit-default swaps clearly played a role in this debacle, and it is crucial that they are part of the solution. *It wont be easy: Wall Street and other beneficiaries of the current setup will scream. But since they are among those who helped bring our economy to its knees, lets try ignoring their objections. *
<p>There is no doubt Wall Street shares the blame.</p>
<p>And the vast majority on Wall Street believe in accountability and that pay needs to determined on a much different basis than it has been. Responsible firms have already moved to make this the way things will be done.</p>
<p>But the idea of the naive on Main Street is just crap.</p>