volume 4 issue 1- final

8/14/2019 Volume 4 Issue 1- Final

1/26

BRUIN BUSINESS REVIEW


2/26

BRUINBUSINESSREVIEW2

DEARREADERS 3WelcometoanewyearofBruin

BusinessReview.Ale2erfromthe

editor.

CALENDAR 4Jumpstartyourcareerbychecking

outtheseeventsallmonthlong.

NEWSOFTHEWEEK 5Obamaannouncesyetanother

housingbailout

NEWSBRIEFS 6

INVESTMENTBANKING 8Anoverviewoftheinvestment

banking.

CONSULTING 10Anoverviewofconsul?ng.

ACCOUNTING 12Anoverviewofaccoun?ng.

SCHOOLPROFILE 14FeaturingUSCMarshallSchoolof

Business.

CAREERTIPS 16Teachingthebasics.

INTERVIEW 18Thehighlyan?cipatedQ&Awith

ProfessorMcDevi2.

THEFINANCIALCRISIS19Readthegeneraloverviewonthefinancialcrisis,

itsglobalimpact,andhowitmayaffectyou,the

student.

INSIDE


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LETTERFROMTHEEDITOR

WelcometoanewyearofBruinBusinessReview.Iwouldliketotakethis?metowarmlythankallourreturningreadersforyourcon?nuedsupportaswellasopenlygreetournewreaderswhohavejustjoinedourpublica?on.Sinceourincep?on,Bruin

BusinessReviewhasstrivedtoprovideyouwithuptodateinforma?onthatisper?nenttoyourfuture.

BruinBusinessReviewhasestablisheditselfasthepremierfreebusinessmagazineatUCLA.Witheveryvolumeandeveryissue,

weseektoworkwiththestudentbodytopublishcontentthatisaimedatprovidingstudentswiththeinforma?onneededtoput

themonestepahead.Thismaytackleanyissuefromrecruitmentdeadlinestoresume?psorfromthefinancialindustrytothe

consul?ngindustry.Whateveryourneeds,BruinBusinessReviewhasbeentheretoprovidethem.

Aswebeginanewvolume,wehopetocon?nuetomeetyourexpecta?onsandmore.Tocon?nuetoprovidetheUCLAstudent

bodywithqualityinforma?on,wewillbemakingafewchangesthatwefeelwillimproveouroverallcontent.Inanefforttokeep

eachissueevenmorerelevanttostudents,wewillbeestablishingnewsec?onsdedicatedtoinvestmentbanking,consul?ng,and

accoun?ng.Inaddi?on,wewillprovideyouwithindustryandcareerprofileswitheachissuetokeepyouinformedofwhat

opportuni?esareoutthere.

ThesechangescomeasBruinBusinessReviewsmaingoalistoserveyou.Tohelpusdothis,Iwouldliketoencourageyouto

con?nuesendinginrecommenda?onsastohowwecanimproveourpublica?on.Itisyourfeedbackthathashelpedkeepusa

success.

AgainIwouldliketoformallythankeveryonefortheircon?nualsupport.Withoutanyfurtherdelay,Iwouldliketopresenttoyou

ourfirstissueforthe009010schoolyear.Isincerelyhopethatyoucon?nuetogetasmuchoutofBruinBusinessReviewas

wedo.

Warmly,

BenjaminLoEditorinChief

DEARREADERS,

BBRSTAFFPRESIDENT

SunnyWong

EDITORINCHIEF

BenjaminLo

VICEPRESIDENT,

OPERATIONS

JulieChen

VICEPRESIDENT,

MARKETING

Chris?neLiu

VICEPRESIDENT,FINANCE

EricPark

ASSOCIATEEDITORS

Cris?naCarillo

COPYEDITOR

JesusHeredia

OPERATIONS

DavidVayzner

FINANCE

StephenMoock

JinSun

MARKETING

StefanieJu

RobertChang

ChrisYoung

JaneKim

CREATIVE

DEVELOPMENT

Amore2eJeng

LonaZhao

ADVISOR

FredKim

DmitryShuster

PhotoCredits

CoverphotocourtesyofLonaZhao

Ar?clephotoscourtesyof

www.sxc.hu

InterviewphotocourtesyofUCLA

Schoolprofilephotocourtesyof

USC
http://www.sxc.hu/http://www.sxc.hu/


4/26


THECALENDAROCTNOV2009

October27

JordanBelfortTheWolfofWallStreetHost:AlphaKappaPsiBusinessFraternity

Time:7pm

Loca?on:Haines39

Descrip?on: Previous mul?millionaire and author or

TheWolfofWallStreetandCatchingtheWolfofWall

Street, Jordan Belfort, will give a mo?va?onal speech

aboutbusinessethicsandsuccess.

October27

AITCWorkshop:CareersinBusinessConsul?ng

Time:5pm

Loca?on:03Covel

Descrip?on: Addi?onal workshops offered Nov. 1 at

5pmandNov.4at6pm

October27

JobSearchJumpstart:MBA

Time:Tuesday48pm

Loca?on:StrathmoreBldg.

1stFloor,Room117

October28

UCLAGraduateandProfessionalSchoolFair009Time:Wednesday113pm,

Loca?on:AckermanGrandBallroom

Descrip?on: Currently registered UCLA Students only.

BruinIDrequired.

November2

AITCWorkshopBusiness101:InvestmentBanking

Time:5pm

Loca?on:03Covel

Descrip?on:Addi?onalworkshopofferedNov.19at5pm

November3

AITCWorkshop:HowtoGetIntoaGreatMBAProgram

Time:5pm

Loca?on:03Covel

Descrip?on:Addi?onalworkshopofferedNov.4at5pm

November3

WarnerBros.SpeakerSeries:Resumes/InterviewingHost:BetaAlphaPsiAccoun?ngHonorsSociety

Time:68pm

Loca?on:Bunche160

November9

AITCWorkshop:SecretstoApplyingtoGraduateSchool

Time:5pm

Loca?on03Covel

Descrip?on:Addi?onalworkshoponNov.3at6:30pm

November10

BruinInternshipandSummerJobFair,Fall009

Time:Tuesday113pm

Loca?on:SecondFloorLounge,Ackerman

Descrip?on:Getthe chancetomeetupwithemployers

specifically targe?ng UCLA students. For currently

registeredUCLAstudentsonly.BruinIDrequired.

November12

JobSearchJumpstart:ForAllMajors

Time:Thursday14pm

Loca?on:CareerCenter,

3rdFloor,ConferenceRoom

November14

BruinConsul?ngGreenTechnologyCaseCompe??on

Time:8am8pm

Loca?on:Humani?esA51

Descrip?on: BruinConsul?ngs4th AnnualStrategy and

Ope ra?ons Case Compe ??on. Compe te with top

undergrads in a 36 hour compe??on to develop a

presenta?on and recommenda?ons regarding clean

energy.

December4

JobSearchJumpstart:LastChanceforFall,AllMajors

Time:Friday14pm

Loca?on:CareerCenter,

3rdFloor,Conf.Rm.

*Sign up for all AITC (Academics in the Commons) Workshops on

MyUCLAandclickonWorkshops.


5/26


NEWSOFTHEWEEKObamaAnnouncesYet

AnotherHousingBailoutBYSUNNYWONG

SENIORSTAFFWRITER

!The Obama administraonrecently announced a new housing

bailout program to bolster the ailing

housing market. Although there have

been slight improvements,foreclosure

rates are s?ll increasing and overall

housing prices are approximately 30

percent lower thanin 007.Their plan

aims to assist local and state housing

agenciestoprovidecheapermortgages

t o fi r s t ? m e o r l o w i n c o m e

homebuyers.Theadministra?onhopes

that this program wil l help lowerincomefamiliespurchasehomesinthe

midstofthistougheconomicstorm.

To provide funding to these housing

finance agencies, the government

p l a n s t o h a v e t h e T r e a s u r y

Department, Fannie Mae,and Freddie

Mac purchasehousingbonds.Thiswill

help housing finance agencies make

new loans to poten?al homebuyers.

Thegovernment alsoplanstoins?tute

a temporary credit program so thatthese agencies can refinance their

exis?ng bonds, which will improve

liquidity access for the outstanding

bonds. The administra?on es?mates

t hi s p ro gr am w il l a ll ow h ou si ng

agenciestolendmoneytohundredsof

thousands of Americans. The

size of the program will depend on

agencydemand.

Expertsbelievethatthisnewiniaveshouldonlyslightly

improvethehousingmarket.

A l t ho u gh o ffi c ia l s h a ve s ta t ed

taxpayers will not have to shoulder the

burden in paying for this program, they

havenotyetreleasedinforma?ononhowthisprogramwillbefunded.However,the

Treasury Department is responsible if a

housingagencyhappenstodefault onits

creditpayments.

Ulmately,thishousingbailoutaims

toenablethesehomeownerstokeep

theirhomes.

Expertsbelievethisnew ini?a?veshould

onlyslightlyimprovethe housingmarket

because Housing Finance Agencyrelated

loans cons?tute a very small por?on of

the mortgage market. (


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NEWSBRIEFSBYAMORETTEJENG

WinnersoftheNobel

EconomicsPrize2009On October 1, 009, The Sveriges

RiksbankPrizein EconomicSciencesin

MemoryofAlfredNobelwaspresented

to two Americans: Elinor Ostrom and

Oliver Williamson.Both winners made

c on tr ib u? on s t o t he a na l ys is o f

e c on o mi c g ov e rn a nc e , o r t h e

regula?onsthatauthorityfiguresuseto

spearhead companies and financial

systems. Ostrom, a poli?cal scien?st

from Indiana University, is the firstwo ma n ev er t o w in t he N ob el

EconomicsPrizeandthefihwomanto

winaNobelthisyear.Herworkfocused

on how commonnatural resourceslike

grazing land and forests can be used

successfully by the people that tend

t h e m w i t h o u t g o v e r n m e n t

interven?on.Williamson, aneconomist

from the University of California,

Berkeley addressed differences in

managingconflictsbetweencompanies

and marketsas well aswhen and why

efficiencyoccursineconomicrela?ons.

MajorLossesforBankofAmerica

On F ri day O ctob er 16th, Americaslargest bank, Bank of America, hasreported a steep loss of .4 billiondollars within the third quarter. Thisloss coincides with the bank CEO, KenLewis, last year ofemployment before

re?rement.Asofnow,thecompanyhasyet toreveal who thesucceedingCEOwill be to undertake this enormousfinancial burden. The mortgage andcredit card divisions of the bank werehitthehardestaslendersarefindingitincreasingly difficult to pay their loansb ac k. H ow ev er, b ad l oa ns h av edecreased in severity compared toprevious losses. What remains inques?on iswhenthe bankwillbe ablet o p ul l i ts el f o ut o f fi na nc ia ldependence on the government since

t hey o btained a 45 mi ll io n dol labailout and are currently paying large

dividendsbacktothegovernment.

SocialNetworkingEffectsonSmallBusiness

A recent study from InternetGo and

Merchant Circle indicates that almos

half the small businesses surveyed use

social networking sites for like Twi2e

a nd Fa ce bo ok , t o i nc re as e t he i

publicity.Thisformofadver?singisnot

only free, but also incredibly effec?ve

dueto the speed and vastlyincreased

rangeofpoten?alconsumers.Howeved e sp i te t h e i n flu x i n p o si ? ve

promo?on,there arepoten?al danger

inu?lizingsocialnetworkingsites.Such

dangersinclude adver?singto such an

e x te nt t h at c o ns u me rs b e co m e

annoyed or the fact that cri?cisms o

t he fi rm a re fo r p ub li c v ie wi ng

However, with such userfr iendly

technology,businessesarenowableto

bridge the gap between themselve

andtheirconsumers.

SixFaceChargesonInsiderTrading

Billionaire Raj Rajaratnam, founder o

the Galleon Group, and five others

including execu?ves from Intel and

McKinsey & Co., were arrested fo


7/26


c on ne c? on s t o w ha t U .S .

A2orneyPreetBhararastatedis

the largest hedge fund insider

tradingever.Theywerecharged

for pocke?ng over 0 million

d ol lars i n i ll egal p ro fit s b y

obtaining informa?on about

businesseslike GoogleInc. andH il to n H o te ls . T h e i l le ga l

ac ? vi ? es w e re s u pp o s ed l y

conducted during July of 007

and were discovered through

first ?me ever courtauthorized

wiretaps.

AsianCountriesDominateBroadbandServices

A recent study of broadband

servicesbyUniversityofOxford,

EnglandandUniversityofOviedo,

SpainandsupportedbyCiscoevaluated

66countriesand40ci?estofindthat

South Korea has come out on top,

bea?ngout Japan,the previous leader,

as themain broadband servicena?on.

South Korea,witha totalof 97%wired

h ou se ho ld s, h as h ad a m as si ve

improvement in the quality and speed

ofinternetservices.FollowingJapan in

third place is Hong Kong and then

S we d en , S wi t ze r la n d, a n d t h e

Netherlands.TheUnitedStateshasnot

madeitintothetop10andisincluded

inthesecondhighestcategorywhichis

defined as having a comfortable

average internet connec?on. This was

an improvement compared to the

previous year in which the survey

stated that the United States had

servicesthatwerebarelysufficient.

DowHits10000

L as t w ee k, D ow J on es I nd us tr ia l

Advantage reached above 10,000 for

thefirst?methis year.Thiscame asa

shock to investors in the midst of a

deep recession.Since March, Dow has

risen 50 percent. Despite this posi?ve

turnofevents,theques?onremainsas

to how long this rise will last. Based

strictly on stocks, it appears that the

economy may be slowly recovering

However,othersarguethatthisrisewil

be brief with some profits based on

cungcosts,notincreasingearnings.It

c a n a l s o b e n o t e d t h a t t h e

unemployment rate is s?ll at record

highs, which goes against indicators of

economicimprovement.

ToreadpastNewsBriefs,checkout

BruinBusinessReview.com


8/26


AGENERALOVERVIEWOF

INVESTMENTBANKINGBYERIKAK.SOLANKI

Investment banking is one of the most a2rac?veand yet elusive career op?ons for students

interested in businessrelated professions.

Investment bankers are known to be highly

compensatedand toworklonghours,but howdo

bankersrake inso much capital andwhat dothey

doduringthoselonghoursManyofushaveheard

aboutdabagirls.com, Da?nga BankerAnonymous,

a Web site dedicated to consoling the significant

others of investment bankers who have been

affected by the economic recession. Many of us

have also seen the Carlos Solis character on the

televisionshowDesperateHousewiveswoohiswifewithexpensive getaways on private jetsand $300

perfumes, which he funds with his job in banking. However,

while investment banking may seem to be one of themost

lucra?vebusinessrelated career op?ons,many studentswho

areconsideringpursuinginternshipsandcareersininvestment

banking internships do not have comprehensive industry

knowledge, and without that knowledge they cant be like

C ar lo s S ol is . C an di da tes m ust h av e a t ho ro ug h a nd

comprehensive understanding of the investment banking

industrytoimpressemployersduringinterviews.

Investmentbankersareknowntobehighlycompensatedandto

worklonghours...

I n s im pl es t t er ms , i nv es tm en t b an ks a re fi na nc ia l

intermediaries.Investmentbankersserveasabridgebetween

two par?es to help companies, and possibly governments,

raisecapital throughmul?ple means.Investment bankerscan

issue (or underwrite) and sell securi?es, which include

primarily equity (stocks) and debt (bonds). In addi?on,

investment banks provide guidance to companies regarding

mergers and acquisi?ons and with trading different financialinstruments,suchascommoditytoequitysecuri?es.

Thestructuresofinvestmentbanksvaryslightlydependingon

theindividualfirm;however,generalinvestmentbanksinclude

three basic departments: research, sales and trading, and

corporatefinance.

Generally, an investment banks research department

thoroughly researchesspecificcompanies,industries,and the

economyandthenmakesrecommenda?onsaboutthebuying

andsellingofvariousfinancialproducts.Thesalesandtrading

department, as the name implies, includessalespeople and

traderswhodealwiththesellingandbuyingofequity(stocks)

and fixed income (bonds). Sales and trading services are

generally for ins?tu?onal or investors with a high net worth.

The corporate finance department is also known as the

investment banking division, which is further divided into

product groups and industry groups. The product groupincludes mergers and acquisi?ons, financial sponsors, and

leveraged finance. The coverage group serves clients from

varying industries, including financial ins?tu?ons,healthcare,

andtechnology,tonameafew.

The sales and trading department, as the name implies,

includessalespeopleandtraderswhodealwiththesellingand

buyingofequity(stocks)andfixedincome(bonds).Thereare

typicallythreetypesofsalespersons.Thereistheclassicretail

broker, who sells stocksand stock advice to the averageJoe,

t he i ns ?t u? on al s al es pe rs on , w ho w or ks w it h l ar ge

ins?tu?onal investors, and the private client servicerepresenta?ve, who works with ultrahigh net worth

individuals.However,sales and tradingservices in investment

banksaregenerallyforins?tu?onalorinvestorswithahighnet

worth.

Traders, on the other hand, help facilitate thepurchase and

sellingofsecuri?esbyexecu?ngtradesonbehalfofaclientor

holding an inventory of securi?es to sell. There are two

primary roles traders play in a bank. First,they help clients

Research

Sales&TradingEquity,Fixed

CorporateFinancingM&A,CapitalRaising,

Underwri?ng

!


9/26


provideliquiditytoclientsbyexecu?ngpurchasesandsalesofsecuri?es.Tradersmakemoneyforthe clientbysellingsecuri?esata

higher pricefromwhentheypurchasedthem.Besidesservingaclient,tradersalsoexecutetradesonbehalfoftheinvestmentbank,

whichisknownasproprietarytrading.Tradersaimtomakeaprofitusingthefirmsowncapital.

Thecorporatefinancedepartmentisalsoknownastheinvestmentbankingdivision,whichiswhatmostundergraduatesaimtoget

into. Thedivisionmainly serves thefollowing two func?ons:1) mergersand acquisi?ons and) underwri?ng. The mergersand

acquisi?onsunitadvisescompaniesonmergersbetween companies.For example,ifcompanyA wantedto purchaseCompanyB,

theinvestment bank will help figureout the final price of the deal andmake sure the transac?on is executed smoothly. The

underwri?ngunit oftheinvestment bankmainlyservesto raise capitalfora client companyeither through equity(stocks),debt

(bonds), or loans.An investment bank is further divided into product groups and industry groups. The product group includes

mergers and acquisi?ons, financial sponsors,and leveragedfinance. The coverage group serves clients from varying industries,

includingfinancialins?tu?ons,healthcare,andtechnology,tonameafew.

Almostallinvestmentbankssharethesamehierarchicalstructure.

Lifestyleasaninvestmentbankerisespeciallydifficultduetothefastpacedworkenvironmentandlonghours.Investmentbankers

working incorporate finance and research usually work more than 100hours a week.Bankers insalesand tradinghavemore

reasonableworkhours,buttheyareconstantlyareunderahighamountofpressure.Whilesomebelievetheconstantpressureand

fastpacedworkingenvironmentgiveinvestmentbankersanedge,othersbelievethepressureistoomuchtosustainapermanent

lifestyle,regardlessofthehey quarterlybonus.Consequently,manybankersmoveontoother fieldssuchasprivateequity,hedgefunds,andbusinessdevelopmentaertheirtwoyears?nt.

Classification of Investment Banks

Bulge Bracket Middle Market Boutique

The largest and mostprofitable firms

Examples: Goldman Sachsand JPMorgan

Firms dealing with clientswith revenues of less than

$1 billion

Example: Jefferies & Co

Specialized firms withrelatively smaller clients

Example: Mercanti Group

!Managing DirectorVice PresidentAssociateAnalyst

PRODUCT

GROUP

MERGERS&ACQUISITIONS

FINANCIALSPONSORS

LEVERAGEDFINANCE

COVERAGE

GROUP

SERVES CLIENTS THAT ARE INDIFFERENT INDUSTRIES INCLUDING

FINANCIAL INSTITUTIONS,

HEALTHCARE, AND TECHNOLOGY,

AMONG MANY OTHERS.


10/26


WHATISCONSULTING?

C ons ul ?n g i s a h ig h pro fil e i ndu str y wi th

professionalsfromdiverseeduca?onalbackgrounds.

In this field, professionals known as consultants

provide their exper?se and recommenda?ons in a

variety of fields such as resource management,

li?ga?on,andtechnology.

A n examp le of a rel a?on sh ip a nal ogou s to

consul?ng firms and companies that use theirserviceswould bethat of a doctor and pa?ent. A

p a? en t w il l u su al ly v is it t he d oc to r fo r

predominantlytworeasons,adiagnosis onanillness

or foracheckup.Similarlyconsul?ngfirmswill use

their exper?se to recommend ideas to help

companies that may be at risk for large losses or

even failure or to promote greater efficiency in a

stable or even thriving company. Government

bodiesandcompanieswillseekconsul?ngservices

to receive a dvic e an d recommen da ?ons for

problemsthattheycannotresolvethemselves.

Consultants primarily offer their services in three

areas of business: Informa?on Technologies,

opera?ons,andstrategy.

Informa?on Technologies consul?ng is concerned

with helping clients adopt new technologies to

improvebusinessefficiency.Consultants inthis field

usually have degrees with a technology related

concentra?on such as computer science. IT

consultantshave experience withsoware usedinbusinesssuchasthoseproducedbyOracleandSAP.

Opera?ons consul?ng help clients improve their

internalworkingsin areas suchas humanresources.

Such consultants in this field improve a clients

organiza?on,processing,andproduc?on. They will

not only make recommenda?ons to improve

opera?ons butalso make sure thatthoseideas are

correctlyexecuted.

Strategicconsul?ngfocuses ona companys external

factorsandenvironmentwithintheclientsindustry.

The factors and environment related to strategic

consul?nginclude compe?ngcompanies, suppliers,

customers, as well as government regula?ons.

Strategy consultants will use their exper?se to

recommendandimplementa planofac?ontohelp

a company reach its goals when one of more of

thesefactorschanges.

O t he r c o ns u l ?n g s p e ci a l iz a? o ns i n cl u de :management, financial services, li?ga?on, human

resources,andhealthcare.

FEATURESOFTHECONSULTING

PROFESSION

Consul?ng provides a wealth of experience in

different business fields because of the various

businessaspects andrangeofclientsandindustries

that consultantsworkwith. Employees areknownto work long hours when working in the industry.

This frequently occurs during busy seasons when

thereare numerousclients andprojects tomanage

due to increased demand for consul?ng services

acrossclientindustries.

This professionrequires moderatetolarge amounts

oftravelas teamsofconsultants aresome?mes sent

out to manage and collaborate with a client for

varying lengths of ?me. It is also a necessity for

professionalsinthis fieldtopossess stronganaly?calandproblemsolvingskills.

CONSULTINGINDUSTRYOVERVIEW:

By:EricPark

StaffWriter


11/26


12/26


Inthewakeof

recentfinancial

scandals,

opportuniesin

accounngwill

goup

An accoun?ng career is very exci?ng

a n d c a n o ff e r t r e m e n d o u s

o pp or tu ni ? es . A c co un ?n g i s t heprocess of structuring and analyzing

economic figures and data for the

internal use of firms and theexternal

useof the public. Organized economic

dataprovidesinsights for managers on

ho w to mo ve fo rwa rd w it h t he

company and makes it easy for the

public to seehow wellthecompanyis

doing. Most importantly accoun?ng is

t h e p r o c e s s o f e s t a b l i s h i n g

accountability within a business or

g ov e rn m en t o r a ny p a r? c ul a rins?tu?on for that ma2er that deals

with money. In the wake of recent

financial meltdowns and scandals,

opportuni?es in accoun?ngwill go up

due to stricter internal regulatory

s ta n d ar d s a n d m o re r i go r ou s

accoun?ngprocedures.

ISACCOUNTINGRIGHT

FORME?

Accoun?ng is a challenging profession

w hi ch r eq ui re s u ni qu e s ki ll s and

a2ributes. A person who is interestedin pursuingan accoun?ng career must

have an ap?tude for math. He or she

must also have good cri?cal reading

a nd a na ly ?c al s ki ll s. A e r a ll ,

accoun?ngrequiresonenot onlyto be

abletoperformmathoneconomicdata

butalsotoanalyzedataandbeableto

discern pa2ernsthatmaybeuseful for

management or individuals. Precision

to detail and punctuality are also

required.Themostimportanta2ribute

is having a commitment to ethicalintegrity. When repor?ng on sensi?ve

financial informa?on, it is vital to be

honestandtonotobscureinforma?on.

UCLA has many different accoun?ng

resources that will help guide you

toward a suitable career path. UCLA

VITA(Volunteer IncomeTax Assistance)

i s a n on pr ofi t o rg an iz a? on t ha t

providestaxassistancetopeopleinthe

West LA community. It also provide

interac?on with major accoun?ng

firms. Volunteering in their program

w il l pro vid e y ou wi th a pra c? ca

knowledge of accoun?ng procedures

and h el p you d et er mi ne w he th e

accoun?ng is the right profession foyou.TheStudentAccoun?ngSocietyi

a UCLA accoun?ng club. They host

eventswithmajoraccoun?ngfirmsand

hold weekly mee?ngs. The Studen

Accoun?ng Society is an excellen

resource that provides UCLA students

with a pathway to the professiona

worldofaccoun?ng.

HOWDOIGETTHERE?

The requirements for an accoun?ng

c aree r a re r igoro us . A d eg ree i n

accoun?ng or a related field is oen

required. UCLA offers an accoun?ng

m in or i n t he An derso n S ch oo l o

Business whichprovides students with

a v er y d et ai le d b ac kg ro un d i n

accoun?ngprocedures.Onceyouenter

into the field of accoun?ng, The CPA

( C e r ? fi e d P u b l i c A c c o u n ta n t

cer?fica?on will be vital as it allow

accountants to file reports with theSecuri?es and Exchange Commission

With a CPA you will beableto rise in

t he fi eld o f ac co un? ng and more

opportuni?eswillbeopenfor you.It is

a known fact that accountants with

CPAs have an advantage over those

whodontinthejobmarket.Thereare

twomajorpathwaystogetyourCPA.

AN INTRODUCTION TO

ByDavidVayzner

ACCOUNTING

Themostimportant

aributeishavinga

commitmentto

ethicalintegrity.


13/26


Pathway1

ForthosewhowanttopracceinCalifornia 36quarterunitsofaccoun?ngrelated

subjects

36quarterunitsofBusinessrelatedsubjects

yearsofworkexperience

passingallfourpartsoftheCPAexam Passinganethicscourse.

Pathway2

Forthosewhowanttopracceinotherstatesas

well.

36quarterunitsofaccoun?ngrelatedsubjects

36quarterunitsofbusinessrelatedsubjects

1yearofworkexperience

5quarterunitsingeneral passingallfourpartsoftheCPAexam

passinganethicscourse

AccounJngCareers

Accoun?ngcanbesubcategorizedintothreedifferentparts.Notallaccountantsdothesamejoband

itisadvantageous toknowthethreedifferenttypes ofaccoun?ngcareersbeforeyoudecidetopursueacaree

pathinaccoun?ng.Belowisaquicksummaryofthedifferentaccoun?ngcareers.

Audit/Internal

If you are in the audi?ng

profession, you analyze the

fi n a n c i a l s t a t e m e n t s o f

companiesanddeterminetheir

fairness and reliability and

whether they are an accurate

r ep re se nt a? on o f a fi rm sfinancialhealth.Amajorpartof

audi?ng is making sure that

companies establish strong

internal control systems to

protect themselves against

fraudulentrecords.

Tax

Here you help businesses and

individualswith their tax forms

a n d p r o v i d e t h e m t a x

consulta?on advice. You can

also advise companies of the

t ax i mp li ca ?o ns o f c er ta in

ac?ons and specialize in taxp ol ic y o f st ate a nd l oca l

governments.Peopleinthetax

business can also specialize in

interna?onaltax.

Advisory

Advisory Accountants assist

companiesinassetsevalua?ons

and help facilitate mergers

betweencompanies as mergers

ca n b ecome very t ec hn ica l

o rd e al s . T h ey a l so h el p

companieswithbudge?ng,andkeepingtrack of their finances.

Other services may includerisk

a s s e s s m e n t s a n d f r a u d

inves?ga?ons.

Accounngfirmslookforthefollowingskillsandaributes:

Analycalability

Leadershipskills

Wrienandoralcommunicaon

skills

Aenontodetail

Abilitytoworkindependently

Teamskills

Multaskingability

Highethicalstandards

Computerliteracy


14/26


anked the top 0

schoolbyBusinessWeek

andU.S.News&WorldReport,theUSC MarshallSchool ofBusinessin

Los Angeles is a private research

and academic ins?tu?on ranked

highly for its accoun?ng,finance,

entrepreneurship and interna?onal

business studies programs. The

Marshall curriculum emphasizes

interac?velearning, being the first

school withinterna?onaltraveland

study projects as requirements for

every MBA degree. Various MBAs

and specialized degrees offered

include:

MarshallMBA

Atwoyear,full?meprogram,theMarshallMBAprogramoperateswitha

lowstudent tofacultyra?oand small

class sizes. Students explore business

problems through a mul?disciplinaryapproach that teaches interpersonal

s k i ll s /te am wo r k , l e ad er s hi p an d

e n t re p r e n eu r i a l t a l e nt s , g l o b a l

a w a re n e ss a n d t e c hn o l og i c al

knowledge. Since Marshall is located

close to major business and financial

centers in L.A., the school offers a

strong alumni network that opens

a d d i ? o n a l o p p o r t u ni ? e s a n d

experience.

Students explore businessproblems through amultidisciplinary approachthat teaches interpersonalskills/teamwork, leadershipand entrepreneurial talents,

global awareness andtechnological knowledge.

MBAforProfessionalsandManagers

TheMarshallMBAProgram forProfessionals and Managers is offered

intheeveningforstudentswhowould

l ike t o b e f ul ly e mp lo ye d w hi le

pursuing an MBA degree. It is a 33

monthprogram,in which the 1st year

c on si st s o f c or e c la s se s. A e r

comple?onof the1styear,thestudent

can set the pace for the rest of the

program (as long as it is within five

years total). The evening class meet

twiceaweekfrom6pmto9:40pm.If

the commute to L.A. is inconvenient,thefirstyearofcoreclassescanalsobe

completed at the new Orange County

CenterinIrvine.

Execu?veMBA

Likethe MBAP.M.program,the

Execu?ve MBA is designed for those

who wish to remain fully employed

w hi le p urs ui ng a n M BA d eg re e.

However, this program is for senior

managersand seasoned professionals.

Students can a2end classes in either

Los Angeles or San Diego on Fridays

and Saturdays from 8:45 am to 4:30

pm. The curriculum is focused on

actual business world situa?ons that

seniormanagersoenencounter.

IBEARMBAProgram

T he I BE AR M BA p ro gra m i s a n

a c c e l e r a t e d g l o b a l M B A f o r

experiencedprofessionals.Thisunique

program is one year intensiveat USC,

with a class size of only 55 students.

From August to December, students

complete the MBAfundamentals,and

from January to July, teams of 45

students par?cipate in a fivemonth

long interna?onal consul?ng project

for a U.S. or foreign corporate client.

T h is p ro g ra m s t re s se s b u si n es s

rela?onships between North America,

AsiaandLa?nAmerica.

R

!

!

!

ByChris?neLiuStaffWriter


15/26


MasterofAccoun?ng

A full?me, oneyear program, the

Leventhal Master ofAccoun?ngis ranked as

on ofthe top graduate accoun?ngprograms

inthena?on.Topreparefor;careersinpublic

accoun?ng,financialservicesandinvestment

banking, government and nonprofit, and

corporate finance, the program uses casestudymethodsandteamworkinallcourses.

MasterofBusinessTaxa?on

TheMasterofBusinessTaxa?on,offered

bothfull?meandpart?me,isaimedto

developskills/exper?seprofessionalsneed

whileworkingwithindividualsandfirmswith

taxlegisla?onandregula?onatall

governmentlevels.Taxa?onincludeslaw,

economics,accoun?ngandpoli?cs,andthus

requiresthetaxadvisortounderstandallaspectsoftaxlawanditsadministra?on.

MasterofMedicalManagement

Thisdegreeprovidesphysicianswiththe

formalbusinesseduca?onneededtohelp

themrealizetheirprofessionalgoals.Itis

modeledaertheExecu?veMBAprogram

andallowsphysicianstoearnadegreeinonly

oneyear,withoutinterrup?ngtheircareers.

informa?onabouttheUSCMarshallSchoolof

Businessprograms,visit:

www.marshall.usc.edu

Admissions

Eachprogramhasitsownadmission

requirements.Tofindapplica?onmaterial

andformoreinforma?onabouttheUSC

MarshallSchoolofBusinessprograms,visit:

www.marshall.usc.edu

MBAAdmissionsProfile

009 010 011

ApplicantPool

ApplicationsReceived 1651 076 4

%Accepted 9% 3% %

ClassSize 19

AcademicProfile

AverageGPA 3.3 3.3 3.3

MedianGMAT 690 700 690

GMAT80%Range 640730 640740 640740

General

AverageAge 8 8 8

AverageYearsWeekExpectancy

5 5 5

MarriedStudents 16% 14% 13%

UndergradMajors

Humanitiesand

Sociology

7% 5% 7%

Science

Science&Engineering 6% 7% 1%

Business 3% 6% 30%

Economics 19% 14% 15%

ComputerScience 5% 8% 7%

!
http://www.marshall.usc.edu/http://www.marshall.usc.edu/http://www.marshall.usc.edu/http://www.marshall.usc.edu/http://www.marshall.usc.edu/http://www.marshall.usc.edu/


16/26


CAREERTIPSTHEBASICS

BYLONAZHAO

STAFFWRITER

Even without this financial crisis, being in college and receiving your degree is not

enough to get a job. The job market is becoming more and more compe??ve.

Regardless,ajobwillnever fallintoyourlapwhetheritisa part?mejobor acareer,

you needto beaggressive and preparedin your job search.But

dontfear;we

FINDINGAJOB:Evenifyouare notcurrentlylookingfora job,it isessen?alto

keep connec?ons with all professionalsyou have met so far.

Forinstance,ifyouhavedonevolunteerwork inthepast, think

about networking with the volunteer coordinator. You never

knowwhowillbelookingforanemployeeinthefuture.

If you areac?vely looking for a job, a very helpful resource

thesedaysareonlinejob searchenginessuchas Monster and

Career Builder. An invaluable resource for UCLA students isBruinView. Where employers post job lis?ng specifically for

Bruins.Whenlookingforajobonlineyouwillwanttoprepare

a longer, more detailed resume so that you canmore easily

differen?ateyourselffromotherpoten?alcandidates.

You donotwant torelyonly oninternet jobsearchengines. It

is important to be aggressive with your job search so look

aroundin theclassifieds, askfriends andprofessors,and even

call companiesaskingifthereare anyavailableposi?ons.You

donotneedtobeharassingpeopleforajob,butyoudefinitely

wanttoexhaustyoureveryresource.

...youdefinitelywanttoexhaustyourevery

resource.

WRITINGYOURFIRSTRESUME:Aresumeisaconcisedocumentshowingemployerswhatyou

arecapableofandhowyouwillbevaluabletotheircompany.

Itisthefirst step togengyour foot inthedoor.Trytothink

ofa resumeasyou would aninterviewandmakeaconscious

effort to use your resume to dis?nguish yourself from otherapplicants.Thiswillgetyouclosertogengyournewjob.

When wri?ngyour firstresume, the best resource is people

who have already wri2en one. A great place to start is to

searchforfreeresumetemplatesonline.Thiswillhelpyoufind

the perfect format for your resume. There are sites that

providecareerspecificresumestocatertoanindustryyouare

applyinginto.Similarly,manypeoplealsochoosetocustomize

their resumes for every job they apply. This is a good idea

becauseyou mayapplyfor several different jobsatthe same

?me. If you use just one resume, you have to keep you

resumegeneralsoastonot limit yourself,but thiscanalso be

boringfor the employer to read and your resume mayfade

into the background. Customizing your resume for each job

will show your employer how you mightbe perfect for their

company.

Star?ng with a blank slate might be in?mida?ng, but

remember, you do not have to be previously employed to

writearesume.Insteadyoucanlistyour volunteerexperiences

andac?vi?esyou havepar?cipated in.Youmay also want to

list specialskills andtalents youhaveacquired thatmay make

youvaluableintheposi?onyouretryingtofill.Theimportant

thinghereis notto lieonyourresume,ifyouarecaughtyou

willonlyenduplosingcredibilitywithfutureemployers.

!


17/26

BRUIN BUSINESS REVIEW 17

Nowthatyouhavefinishedwri?ngyourfirstresumeyoumust

proofread.Checkyourheaderandmakesurethatallyour

contactinforma?oniscorrectandyouhavenotmisspelled

anything.Havesomeoneelsereadyourresumeandaskifyour

objec?vesareclear.Finally,printyourresumeoncleanwhite

paperwithplainblackink.

ifyouarecaughtlyingonyourresumeyouwillonlyenduplosing

credibilitywithfutureemployers.

ACINGYOURFIRSTINTERVIEW:Firstandforemost,itisbeneficialtoresearchthecompanyyou

areapplyingto workfor.Many employershave a lot of pride

for their company and may look for employees who are asenthusias?castheyare.Doingyourhomeworkalsomakesyou

more prepared for the interview. You can then cater your

answers toward whytheir company needsyou on their staff.

You will also find that employers will ask if you have any

ques?ons for them,having ques?ons prepared will help you

conveyyourinterestintheircompany.

Prepare your answers beforehand by searching common job

interviewques?onsandprac?cingthemeitherwithafriendor

infrontofamirror.Youwillwantyouranswerstobeclearand

youwantensureyouareansweringtheques?onthat isbeing

asked and not fall off topic. This does not mean that you

should memorize your answers; you do not want to sound

robo?cand rehearsed. Instead,makea listofpointsthat you

wantto

cover when answeringdifferent ques?ons.Keepin mindtha

when youanswer theseques?onsyou wanttheemployer to

knowwhytheyshouldhireyouoverotherapplicants.Have a list of references and an extra copy of your resume

printed outfor the interview in casethe interviewer will no

have it in front of them. (Remember, you do not need apreviousjobforreferences,pickafew importantpeoplefrom

yourpastac?vi?esorevenaneighboranyonethatcanvouc

foryou).

Dress appropriately for your interview. Wear clean ironed

clothes and clean closetoed shoes. You should be wel

groomed,andtrynotto overwhelmtheinterviewer withyou

cologneorperfume.Whenindoubtaboutwhattowear,think

moreconserva?vely.Thismeanstry to conceal anyta2ooso

body piercings. Looking well rested and relaxed for you

interviewisessen?al.

Try to beearly for your interviewweare not saying oneo

two hours early, but atleast 15minutes sothat youcan find

whereyouresupposedto be.Thisis also agood ?metouse

therestroombeforehandsothatyoudonotstressyourselfou

duringtheinterview.

When your interviewer introduceshimself/herself, wait for a

handshake and do not sit un?l theinterviewer sits down o

invitesyoutositdown.Maintaineyecontactfortheinterview

butdonotstareyour interviewer down,you want toletthem

knowyouareengagedintheconversa?onbutnotthreatening

them.Youshouldalso keep good posturebut trynot tolook

toos?ff.Donotfidgetduringyourintervieworcrossyourarms

orputyourhandsinyourpockettheseareclearsignsofhow

uncomfortable you are and can make the interviewe

uncomfortable.

A lot of employers will ask when you are availableto work

aer theinterview.Donothesitatetomen?on ifyou havean

obliga?on that might hold you back.Once again,you want to

behonest.Ifandwhenyouget hired for theposi?on, you don

notwanttospringyourscheduleonthem.

Attheendoftheinterviewremember tothank theinterviewe

andanyoneelsewhohashelpedyou(i.e.therecep?onist,any

associates,secretary,etc.). Youmayalsowanttoask what the

selec?on process islike and how long itmightbe for you to

findout ifyou got the job. Reallytrytoleavetheinterviewe

with a las?ng impression, even if youdo notget the jobthis

?me,theymightrememberyouforanotherposi?onlater.

!


18/26


Q1:Tostartoff,whatdoyouenjoymostaboutteaching?

EM:Iverymuchenjoytheinterac?on

withstudents,especiallyduringoffice

hours.Itisachallengetoteach

economicsandIenjoythatchallenge.

Q2:Whatwouldbeyourbiggestfrustraonaboutteaching?

EM:Thatwouldhavetobethelarge

classsizes.Thelargeclasssizesmakeit

verydifficulttointeractwithonlybuta

handfulofstudents.Otherwise,Idonthavemanycomplaints.Thestudentsat

UCLAarebyandlargeveryhard

workingandintelligent.Thatisoneof

thethingsthatmaketeachinghereso

enjoyable.

Q3:Whydidyouchoosetobecomeaprofessor?

EM:ImustadmitIdidnotoriginally

plantogointoteaching.Iwent

intothefieldofeconomicsbecauseI

founditfascina?ng.Myini?alplan

asanundergraduatewastogointothe

businessfield,butaerafewecon

classes,Iwashooked.SowhenIget

toteachsomethingthatIfind

enormously

enjoyable,thatmakesteachingvery

easyandverysa?sfying.

Q4:Ifyoucouldhavechosenanyotherprofession,whatwould

itbe?

EM:Idontknowifthiscountsbecause

itiss?llinacademia,butIthinkIwould

alsohaveenjoyedhistoryasa

profession.Ihavealwaysbeenvery

fondofhistoryand,infact,oneofmy

favoritefieldsasagraduatestudent

waseconomichistory.ButIenjoyother

branchesofhistoryjustasmuch.

Q5:Alotofstudentsconsideryoutobeoneofthehardest

Economicsprofessors.Doyouhave

anyadviceforstudentsthatfind

yourclassesdifficult?

EM:Work.Work.Work.Askques?ons.

Economicsis[a]difficultsubject,soastudentneedsalotofperseveranceto

succeedinthisfield.Thereis

unfortunatelynospecialtrickto

doingwellineconomicsoralmostany

otherrigorousfieldofstudy.Ithelpsif

youenjoythesubjectma2er.

Q6:WhatdoyoudowithyourmeawayfromUCLA?

EM:WhenIhavethe?meandthatis

notveryoenIliketotravel.Iamalso

ahugesportsfan,especiallycollege

football.

Q7:HaveyoubeenkeepingupwithUCLAfootballgamesaswell?

EM:Oh,ofcourse,Iwatcheverysingle

game,evenifweareatasourpoint.

Q8:Nowontosomemoredifficultquesons.Howwouldyou

describethecurrentstateofthe

globaleconomy?

EM:AtleastfortheU.S.economy,as

theFedhasrecentlysaid,thereare

definitelysignsthatitisstabilizing.Of

course,mostspecialistsinthisfield

predictaveryslowrecovery,sowewill

probablyhavethehighunemployment

ratesforafewyears.

Q9:Lastqueson:Manybelievethatthefinancialcrisishas

madeeconomicsmorerelevant

andimmediatetocollegestudents

Lookingatyourclasses,how

accuratedoyouthinkthis

statementis?

EM:Wewouldliketothinkthat

economicsisalwaysveryrelevant.Has

itbecomemorerelevanttocollege

studentsIwouldsaythatithas:

Especiallythoseabouttograduateand

enterthejobmarket.Recentevents

havepiquedmanystudentsinterestin

businessfluctua?onsandthesources

ofsuchfluctua?ons.

Q&Awith...ByJulieChen

SeniorStaffWriter

Edward McDevi, a lecturer for UCLAs

Department ofEconomicshasbeen teaching

ever since genghisPh.D. attheUniversity

of California, Los Angeles in 1994. He is

c u r r e n t l y t e ac h in g a c l as s o nMacroeconomicsTheory.

EdwardMcDevi


19/26


THEFINANCIALCRISISTheGlobalImpactoftheFinancialCrisis 20

HowtheFinancialCrisisCanAffectYou 22(TheStudent)

TheFinancialCrisis:AnOverview 23


20/26


FINANCIALCRISISTHEIMPACTONTHEGLOBALECONOMY

BYSTEPHENMOOCK

CHINASROLEINTHE

GLOBALECONOMYOver the past year there has been a

considerableamount of buzz revolving

around the Chinese economy with

respect to the global financial crisis.

People have been throwing around

such statementsas China owns allof

Americas debt, and China has not

b ee n a ffe ct ed b y t he w ou nd ed

interna?onal economic state. Theseclaimshavevalidity, but they can also

be misinterpreted without a deeper

look into the current state of China.

The first keypiece of informa?on that

must be understood is that China,like

most of the other developed world

na?ons did receive a government

s?mulus package in order to prevent

itslargelyexport basedeconomyfrom

collapsing. The end of 008 was a

t er r ib l e ? m e f or r et a il . S u ch

establishments stopped placing ordersformoremerchandise.Thiswasakiller

for Chinas manufacturing industry

which thrives on constant worldwide

exports. China managed to pull

through the brief lull in trade. Before

another Wall Street giant could fall,

Chinas produc?on was back up and

running. However, produc?on is s?ll

not back to its precrisis state.

Retailers in na?ons worldwide

are being more cau?ous about

theirpurchases.Theyalsodonot

have the excess liquid capital

that was once had to purchase

excess goods and find ways to

getpeopletobuythem.

The size of Chinas economy is

growingbuts?lllessthanathird

ofthatoftheUnitedStateswith

a GDP of13.8trillion. Being a

countrywhereithasprovenhard

to borrow, both corpora?ons and

households in China have resorted to

higher savings ratesin thepast years.

These savings put China in a premier

statetolendwhentherestoftheworld

rea lly needed it. However that

excessivesavingdoesnot s?mulatethe

economyornewbusinessgrowth.

Chinasrecentgrowthissomethingthat

shouldbepaidclosea2en?onto.Aer

the deployment of the s?mulus, there

has been a rapid jump in share and

houseprices.Itistooearlytocallthisa

bubble, but the government needs to

be ready to introduce legisla?on in

order to ?ghten liquidity if this trend

con?nues.TheShanghaiAshareindex

isup a solid 60% fromlastNovember

andtheaverageChinesehomepriceis

ni ne ?mes t hat o f the househo ld

income. Thesefigureswhencombined

with thelarge increase in trading and

home sales would lead anyone to

believe that this is thebeginning of a

bubble that willundoubtedlylead toa

catastrophicburst.

t has beena lile overa year now since the collapse of the Wall Street giant Lehman Brothers and thnaonwiderealizaonthatthefinancialsectorwouldbeinforastomachchurningride.Aertheinvestment

bank filed Chapter 11 bankruptcy protecon on September 15,2008, markets experienced unprecedente

dropsthatcausedpeoplearoundthenaontocringeastheir401ksdisappearedbeforetheireyes.Beginning

October6,inwhatbecameknownasBlackWeek,theDowJonesindustrialaveragefell1,874pointsor18%

This becamethe indexs worst weeklydeclineonboth a pointand percentagebasis ever. With Americans bein

worriedabout;paying theirmortgage,findinganotherjobaerbeinglaidoff,orthepossibilityof rerement, it i

easy to understand why people have been more concerned with their own well being instead of the globa

ramificaonsof thefinancialmeltdown. Theoriginalpanicisovernowanditisimportantthatwelookwithabroa

view athow naons otherthan theUnited States have been affectedbythis turmoil. In this arcle itwould b

impossibletocoverallareasoftheworldandhowtheyhavebeenaffected.Insteadthefocuswillbeontworelevant

topics: Chinasroleintherecovering globaleconomyandtherestructuringofglobalfinancethatwillhelphealth

I

!

...theaverageChinesehomepriceisninemes

thatofthehouseholdincome.

StaffWriter


21/26


RESTRUCTURINGOF

GLOBALFINANCEMany economists are fairly confident

that we have seen the worst of the

recessionandtheeconomyisreadyto

beginmakingarecovery.Now,policies

need to be implemented so that a

steadyrecoveryis possible. The world

powers and central bankers must jointogether to make sure that the when

t he e co no my r ec ov ers , i t i s b y

sustainable means. Along with the

United States, other interna?onal

powers, Japan, France, Germany, and

theUK,havebeensignificantlyaffected

b y t hi s g lo ba l h ar ds hi p l ea vi ng

eve ryo ne in a p osi ?o n rea dy to

nego?ate.

Agroupoftwentyfinanceministers

and centralbankersmaking up the

G0metinPi2sburghfortheirmost

recent summit to discuss future

r e g u l a ? o n s t h a t m u s t b eimplemented into the financial

industry. Established in 1999, the

G 0 ga th ers t o c onv er se a nd

b ra i ns t or m a b ou t h o w t h e

i n du s tr i al i ze d a n d d e ve l op i ng

na?ons of the world can work

together for the benefitof the

globaleconomy.Oneofthehot

t op ic s d is cu ss ed w as t he

c o n t r o v e r s i a l i s s u e o f

e x t ra v a ga n t b o n u se s f o r

financial sector employees.

Germany and France tend to

lean towards a stricter stance

onthesizeandtypeofbonuses,

wan?ng to limit them to a

s ma ll er p er ce nt ag e o f a n

individualsnonvariableincome

as well as paying par?ally in

shares rather thancash. Britain

and America s?ll lean towards the

route of fewer restric?ons, holding

s tr o n g t o t h e f r e e m a r ke

philosophy andbelieving thatfirm

should make thedecisions on how

muchto pay their employees. The

G0 issued a statement indica?ng

that regula?ons would be maderequiring a significant por?on o

v ar ia bl e c om pe ns a? on t o b e

deferred (?ed to performance and

to be issuedin theform of stock)

Th ey al so a ske d a ll fir ms to

i m p l e m e n t i n d e p e n d e n

compensa?on commi2ees who

review the firms structure and

systema?c risk,adjus?ngemployee

compensa?onappropriately.

A no th er i mp or ta nt a sp ec t ofinance that the G0 inves?gated

was raising required percentage

equity controlled by large banks

When many loans backed by li2le

equity (the value of the property

held against the loan) are present

unstable economic condi?ons wi

likelybetheresult.Itmayseemlik

this problem would be easily fixed

by implemen?ng a global standard

minimumequityrequiredtoborrow

on. However, theproblem lays inac co un ?n g r ul es t hat a re n o

uniform in every country. Meaning

that the way assets are evaluated

canvaryenormouslyfromplaceto

place. Americanstandards usually

involve pricing assets to market

whereEuropeanpoliciesareaiming

to revert to smoothed balance

sheetsthatarebe2erforregulators

than investors. TheG0agreedto

work on geng these prac?ce

standardized interna?onallyso tha

lesswillbelostintransla?on.

!

!


22/26


HowtheEconomyisAffecngYou BY CHRIS YOUNG

First,somethingthatdirectlyaffectsus.

In the past year, the UC system has

raised tui?on by9.3%. For theaverage

st ud en t w it h n o fi na nc ia l a id o r

scholarships, that is nine hundred fiy

just for tui? on. T his is not even

includinghousing, mealplans,or anyof

the other ameni?es we pay for. For

thoseof you who were a li2le slow in

mathclass,a thousand dollarsis not a

laughing ma2er. Thats two UCLA

French textbooks,twoCivil Engineering

t ex t b oo k s, f o ur m i c ro e co n o mi c s

textbooks, and a subscrip?on to the

magazine of your choice with changeleoverforlunchatAckerman.

Besides the thinning of our wallets,

compe??onforinternshipsisbecoming

fi erc e. F ir ms w hi ch u se d to o ffe r

n u m e r o u s i n t e r n s h i p s f o r

undergraduates have been cung

downon theirofferings.An investment

group in San Francisco which in 007

tookon threeundergraduateinterns in

their mortgage department including

onefrom UCLA could not take on any

interns in the summer of 009 simply

becausethere wasnotenoughworkto

givetoanunpaidintern.Stopandthink

aboutthisfora second. There wasno

demandforan unpaid intern.Although

this is the excep?on rather than the

rule, compe??on and supplyof things

such asjobsand internshipsfor collegestudentshavebeencomingfurtherand

furtherbetween.

The en?re picture is not all grey skies

and raindrops. With fee hikes and lack

ofjobs,studentsarebranchingoutand

developing more skills. Students are

spending more?me a2ending student

runworkshopssuchasresumebuilders

and mockinterviews.Studentsarealso

beginning to map out their op?ons.

Graduate school is becoming a much

morea2rac?veop?onasjobsbecome

ararecommodity.The averagestudent

is now much more aware of what he

cando tomakehimselfmorea2rac?ve

fortheeventualityofenteringtheworkforce.Inaway,thisrecessionishelping

by driving students to learn essen?al

business skills that will help them in

both recessions and normal economic

?mes. In a recovering economy, these

skillswillbeevenmoreuseful.TheDow

Jones Industrial Average, one of the

biggest indicators for the state of the

Americaneconomy,broke10,000points

in midOctober for the first ?me in a

year. Combined withthe posi?ve news

coming from Ben Bernanke and the

treasury department, it looks like our

extended economic forecast includes

some sunshine for current college

students.

Unless youhavebeen living under arock,you know thatcurrently, Americaandmostof theworldhasbeen lockeddowninan economicrecession.The

newshasbeeninundatedwithdoomandgloom.However,thereisastoryout

therethathasntbeentold.Wehaveallheardthesta?s?csandfigures.The

job loss figures, the consumer price index, and of course, all the speeches

madebyallthetalking headsweseeregularlyontelevision.Buthowarewe,

ascollegestudents,affectedYes,eveninourworldofbooksandbeer,the

interna?onaleconomyhasaffectedusprofoundly.

StaffWriter


23/26


THEGREATCREDITCRISIS:ALONGBUMPYROADBY ROBERT CHANG

STAFF WRITER

heGreatCreditCrisishasscarredthelivesofmany

Americans.Theyarehurngsincetheyhavejoined

theincreasingnumberofunemployedpeopleor

havewitnessedvalueoftheirstockporolios

slashedin half Ithasbeen more than ayearsincethecrisis

brought the financial tan Lehman Brothers to its knees,

prompngthegovernmentto issueanunprecedentedmul

trilliondollarbailout.Yeteveninhindsight,manypeopledo

notunderstandtheeconomiccrisisroot.

Does the fault lie with former president Bush? Former

Federal Reserve chairman Alan Greenspan? Or Wall Street

CEOs? Should the blame fall on investors, mortgage

companies, or even the average American? To get to the

boomofthiscrisis,wetraceitsrootstothebeginningofthe

housingboom.

THEAMERICANDREAM

(NOW40%OFF!)

To take a cue from our

former president, we can

blame the housing boom

and its subsequent bust

on Osama Bin Laden and

the infamous September

1 1, 00 1, a 2a ck s. I n

a d d i ? o n t o l o s s o f

A m er i ca n s l i ve s , t h e

American economytooka

heavy blow that day. Under thenchairman Greenspan, the

Federal Reserve loaned out billions of dollars to financecompanies and cut the interest rate from 3.5 percent to 1

percentovertheremainderof001.Thisinfluxofmoney

into the financial system did its job in saving the

economy from a recession induced by the events of

September11.Thelowinterestratesandexcesscapital

madeborrowingali2letooeasy.

With all the extra money, banks were willing to finance

mortgageswith muchlower interest rates,makingiteasierfo

Americansbuyhomes. Hence, the American dream hadjus

becomeawholelotcheapertoa2ain.

Peoplewhonormallycouldonlyaffordtorenttookadvantage

of low interest rates to buy homes. The growth in demand

causedhousepricestoskyrocket,andsomehomeownerstook

advantageofthemarketbyrefinancingtheirhomesatahighe

price.Many Americanscould nowmakea living buyingand

sellinghousesforprofit,alsoknownasflipping.

Alone,banksdidnothavecapitaltofinancealloftheirclients

homes. They sold some of the mortgages to government

sponsored enterpriseslike FannieMaeand FreddieMac,who

consequentlybought50percentofresiden?almortgagesfrom

thebanks.Normally,FannieMaeand FreddieMacwould only

buy mortgages that held up to certain standards, but the

standardswerelowered duetogovernmentpressureto keep

supplyonparwithrisingdemand.Thiswasthefirstofaseries

ofriskymovesthatwouldeventuallyleadtothehousingbust.Later, as Wall Street investors began stepping up thei

purchase of risky debt, Fannie Mae and Freddie Mac fel

increasedpressuretocompete.

The housing boom caused fervor in the banking industry

Bankers were quick to take advantage of the opportunity

lendingmoneytopeoplewhodidnothaveadequatecreditto

buyahomebasedonprevious

standards. These subprime

mortgagesweremost popular

in none other than our own

S tate o f Cal if or ni a. S oo n,en?re companies sprung up

overnight devoted to lending

thesesubprime mortgages.By

lending money to aspiring

homeowners with bad credit,

banks risked a chance that

l oans w ou ld d ef au lt . T hi s

would render their mortgages

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worthless.Oneofthemostnotoriousprac?ceswasthestated

incomeloan. Whereinterest rateand creditweredetermined

by the income claimed by the borrower. Some people

exploited thisprac?ce byexaggera?ngtheir incomesto geta

be2erinterestrate.

THECORRUPTIONSPREADS

In another world this would have been the extent of the

problemandonlythehousingmarketwouldsufferinthelong

run.Reducing severityof therecession.Unfortunately, this is

not how business is done in todays global economy. Wall

Streetinvestmentbanksboughtmortgagesfrombanklenders,

theinvestmentbanksthen sliced them up,repackaged them,

and soldthemas securi?es,themost commonof which were

collateralizeddebtobliga?ons(CDOs).Thisprac?ceturnedout

to bea huge mistake

since investors were

unaware that these

purportedly safesecuri?es they were

b u y i n g c o n ta i n e d

parts of the highrisk

subprime mortgages.

Investors werewilling

to buy these CDOs

b e c a u s e t h e

companies in charge

of monitoring the risk

of securi?es had given them AAA ra?ngs(One of the safest

ra?ngs possible). The ra?ng companies later admi2ed their

mistake,butthedamagehadbeendone.

To cover their bases, investors bought credit default swaps

from insurance companies. These insurance plans covered

m or tgage s ec ur i? es i n c as e t he y d efaul te d and t he y

reimbursed investors for their losses. AIG was one of the

companiesthatissuedmanyofthesecreditdefaultswaps.Like

everyoneelse,AIGbelievedthehousingboomwouldcon?nue

indefinitelyandconsideredinsuringCDOstobeasafebet.

In early 006, the housing bubble showed some signs of

defla?on, against expertp re d ic ? on s t h at h o me

prices would con?nue to

rise. With less demand in

themarket,banksbeganto

r ed uc e s up pl y o f l oa ns

t h er ef or e e n di n g s o me

loose lending prac?ces.

M a n y r e c i p i e n t s o f

subprime mortgages had been issued adjustablerate loans

which meant bankscould change the mortgage interest rate

basedon economiccondi?ons.This had workedoutverywel

for borrowerswhenmarket condi?onswerefavorable,butasthemarketslowed their mortgagerates increasedto beyond

what theycould afford.Americanspiled with debtfoundthey

hadnootherchoicebuttodefaultontheirmortgageloans.

The en?re situa?on wasa mess of hidden landmineswithin

the financial sector. Banks loaned their mortgages to

investment banks and Fannie Mae and Freddie Mac. These

companiescutthemupandsoldthemassecuri?es,hidingthe

dangerous subprime mortgages in each security like a

landmine. Investors and hedge funds then bought up the

securi?es,believingthat theywererela?velysafethanksto a

miscalcula?onby thera?ngagencies.ThenAIGinsuredthese

securi?es, based on the same assump?on that they were

safe.Asthehousingmarketstartedtofail,itbegantotrigge

thefinanciallandmines.

Atfirst,the effectsweresubtle:Two Bear Sternshedgefund

collapsed inJune007,andin August, 007 thelendingfirm

Countrywide had to berescued byBank of Americafromthe

crushing weight of its mortgages in default. Congres

addressed theissuebriefly.Overall,theredid not seemtobe

much cause for alarmyet. In 008, investors began selling

stock in Bear Stearns. Following rumors that the firm was

drowningin toxic securi?es; itsstock pricedropped to$30asharefrom$171ayearearlier.AttheinsistenceoftheFedera

Reserve,JPMorganChase boughtBearStearnsfor $a share

The government was forced to buy out Freddie Mac and

FannieMaeinordertokeepthemafloat.

In September 007, Lehman Brothers, another Wall Stree

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THENTHECDOsHITTHEFAN

In September 007, Lehman Brothers, another Wall Street

giant, declared itself bankrupt. The Federal Reserve had

considered a bailout but declined because it feared poli?cal

repercussions. The fall of Lehman Brothers shocked Wall

Street.In onlytwo days later, the global insurancegiant AIG

was on the verge of bankruptcy. In light of these massive

failures, and the fragile state of AIG, the Federal Reserve

believed itcould no longer affordinac?on.Consequently,AIG

received $85 billion in federal bailout money, which the

ObamaAdministra?onassertedwouldavoidaglobaleconomic

collapse.Soon aertheAIGdebacle,banksbegan crashingby

thedozen.

Former TreasurysecretaryHenry PaulsonandFederalReserve

chairman Ben Bernanke proposed a $700 billion bailout

program before Congress. When Congress rejected the

proposal due to the lack of oversight s?pula?ons, the Dow

Jones Industrial Average plummeted 778 points, the largest

pointdropinU.S.DOWJoneshistory.Asanincreasingnumbe

ofbanksbuckled,anewprogramwaspresentedtoCongress

TheTroubledAssetReliefProgram(TARP),which required the

same $700 billion of funding but integrated the oversigh

requirements Congress sought. Congress approved the

program,anditseemedtoassuagethefinanciallandmines.

DONTLETTHEFINANCIAL

SECTORHAVETHEALLFUN

Just when the economy seemed to have bo2omed out, the

American auto industry collapsed. Already weakened by

foreign compe??on,American carcompaniesweresha2ered

by themassive drop in consumer spending prompted by the

recession. Chrysler and General Motors (GM) CEOs stood

before Congress and urgently requested help. Presiden

Obama forced GM and Chrysler to declare chapter 11

bankruptcy if the they were to reconstruct themselves

Consequently,bothcompaniesmademassivecutsat the cos

ofmillionsofAmericanjobs.

AREWETHEREYET?

Throughout 009,the U.S.government spent more than $10

trillion dollars oneconomicrecovery.Earlier thisyear, history

wasmadetwiceasBarackObamatookofficeandtheFedera

Reserve cut interest rates to less than one percentage poin

abovezero.TheObamaAdministra?ona2emptedmany?mes

to rescue the economy, one of its most pronounced efforts

being the American Recovery and Investment Act of 009

whichauthorizedincreasedspendingonrescuingmostlylargefinancial firms. But the increasing number o}anks deemed

troubledornearbankruptcybytheU.S.treasuryseemedto

increaseeveryday:5 thefourth quarter of 008and 305

and416inthefirstandsecondquartersof009,respec?vely.

Americanswere further skep?cal their tax dollars were being

used effec?vely and efficiently when reports were released

revealing that AIG had paid $165 million in bonuses to

execu?ves (including those that had contributed to the

companysdownfall).BankstresstestsconductedbytheU.S

Treasury revealed that the majority of banks s?ll needed

governmentaidtosurvivetherecession.

During summer 009, things began to improve. The abysma

housing market bo2omed out and began to show signs o

recovery. TheDow JonesIndustrial Averagehit 10,000point

on October 14, 009, and it con?nues to move upward

Furthermore, Wall Street companiesthat were bailed out by

thegovernmentbelievethattheywillsoonbeabletopaythei

debt.

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26/26

TERMSYOUSHOULDKNOW:BEANEXPERTONTHERECESSION

Subprimemortgage:loansmadetoprospec?vehomeownerswithinadequatecredit;highriskofdefault

Adjustableratemortgage:homeloanwhoseinterestratecanchangeatthebanksdiscre?on

Mortgagebackedsecuries:securi?eswhosevaluecamefrommortgagepayments;themostcommontypewerecollateralizeddebtobliga?ons

Collateralizeddebtobligaons(CDOs):securi?esthatweremadeupofdifferentpiecesofmortgages,someofwhichweresubprime

TripleARang:ra?nggiventosecuri?esthatareconsideredtobesafe;thisra?ngwasmistakenlygiventomortgagebackedsecuri?es

AIG:anAmericaninsurancegiantwithglobal?es;theObamaAdministra?onfearedaworldwideeconomicmeltdownhaditbeenallowedtofail

FannieMaeandFreddieMac:governmentsponsoredenterprisesthatbuymortgagesfrombanks;becameincreasinglyriskinclinedduringtheBushadministra?on

BearStearns:WallStreetinvestmentbankthatplayedheavilyinthemortgagebackedsecurityexchange;itsstockvalueplummetedaertwoofitshedgefundscollapsed;eventuallyboughtbyJPMorganChaseBank

WashingtonMutual:highlysuccessfulcommercialbankthatpar?cipatedinthesubprimemortgagefiasco;becamethebiggestbankfailureinU.S.historyduetodefaultedmortgageloans;wasboughtbyJP

MorganChaseBank

AlanGreenspan:chairmanoftheFederalReservefromAugust1987toJanuary006wholoweredinterestratesaerSeptember11,001,andwarnedaboutholesinthehousingbubble

BenBernanke:GreenspansreplacementandcurrentchairmanoftheFederalReserve;tookhandsonapproachtomanagingthecrisisandmademanybailoutswiththeFederalReservethatwerenotincludedin

theCongressionalfund

volume 4 issue 1- final

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