Background

I am delighted to have this opportunity to address the Iowa Electronic Markets (IEM) Inter-Disciplinary Education Alliance program with the Capital Markets Research Center.  We all appreciate the funding from the U.S. Department of Education Fund for the Improvement of Postsecondary Education to introduce the IEM into classes at Historically Black Colleges and Universities, Hispanic Serving Institutions, and Community Colleges.

We have many unique opportunities in America, and N.A.A.C.P. Chairman Julian Bond recently summarized these opportunities in a concise statement.  He said,

If we can shrink the world’s population to a village of only 100 people, keeping all existing ratios the same, that village would look like this: there would be 57 Asians, 21 Europeans, 14  from the Western hemisphereBnorth and southBand 21 Africans; 52 would be female; 70 would be nonwhite and 30 white; 70 would be non-Christian and 30 would be Christian. Six of the 100 people would own 59 percent of all the wealth in the world, and all 6 of those people would be from the United States.  Eighty of the 100 people would live in substandard housing.  Seventy would be unable to read and write.  Fifty would suffer from malnutrition.  One would have a college education.

Note that only one person has the minimal education to be interviewed for a job on Wall Street or to apply for graduate school.

I would like to discuss the environment for minorities and people of color on Wall Street.  I realize that this audience is largely from historically black and minority schools, and I want to assure you that we are trying to increase the pool of candidate schools from which we recruit.  As a matter of fact, Dean Puto has the same concern because most investment banking practices have not recruited MBAs from Georgetown, which has a relatively new program. My comments this evening do not necessarily reflect the official position of Credit Suisse First Boston, but there are no secrets in what I am going to say.

What makes a difference today are the circumstances behind opportunities.  Diversity cannot be force-fed on Wall Street.  Diversity needs to be recognized after it has contributed economic value.  The history of Credit Suisse First Boston in the area of diversity shows that a number of African Americans have been promoted to managing director and are responsible for substantial groups and individual product lines.   This achievement is substantial and it exists in an organization where the employees are evaluated solely on performance, which created a unique population of talented minorities.  In addition, a number of senior people at other bulge bracket firms had some connection to Credit Suisse First Boston at some time in their careers.  These talented individuals earned their positions solely through performance.

Today our industry has a problem attracting and retaining talented young minority professionals.  There are a number of political considerations to take into account when attracting people of color into the investment banking business, and these considerations sometimes make it a lot harder for the people who are already in the business.  First, every person should add value to the firm.  There is always a feeling of hidden pressure, especially for minorities,  that one needs  to outperform one’s  peers to earn the right to participate in the industry.  This pressure is good from a competitive point of view, but if it becomes a person’s sole objective, it can be detrimental to a long-term career.

Most of the individuals who are successful investment bankers began their careers as product specialists.  They developed relationships with clients based on product expertise in important areas such as mergers and acquisitions.  The trust they built from their performance enabled them to expand their contacts and business within the industry.

I achieved my goals in part through dedication and hard work, but luck played a part as well.  Looking back at my experiences at Georgetown and Wharton, I realize that growing up I did not know anybody who was employed in the investment industry. This is different from the experience of many of  my peers, whose family and friends were part of the industry. Even today, not one of my high school or college minority contemporaries is employed on Wall Street.  What happened to me that allowed me to have those opportunities?  I do not under-estimate my  being in the right place at the right time.

A Place at the Table

To become a respected participant in the investment banking business, one must establish a presence within the industry. This is achieved both by forging an identity through performance and by serving as a role model of success for those who will follow. Senior management will recognize a  commitment to attracting, promoting, and retaining top quality people of color to the business and to the firm by the example that one establishes.  The sincerity of this commitment must be communicated to management on the basis of its importance to the business and not because it may be the Apolitically correct path.

Moreover, one must remain alert to social issues that may require one’s attention and ultimate intervention. Over the length of a business career, there is likely to be a situation in which a social issue will affect you deeply although it may be outside of your regular business activity and responsibility.  For me, this  was the unfortunate incident involving Joseph Jett, the bond trader at Kidder Peabody, which resulted in the demise of the firm.  In addition to charges of inappropriate trading activities, he was charged with inappropriate personal activities that reflected poorly on his African American background.   In business, it is essential to leave the personal issues about color and background behind and to judge behavior totally on the basis of  performance.

The Jett story appeared in the first section of The Wall Street Journal and covered  two pages.   Information was communicated to the media by a supposedly anonymous source at Credit Suisse First Boston in addition to sources at other firms.  Part of  the story about Joe Jett’s work at Credit Suisse First Boston included comments by an unidentified person stating that the person had entered Jett’s computer files and obtained personal information.  When the media coverage concerned what happened at other firms, there was an official corporate "no comment."

I was extremely angry to read about the anonymous source (which, in reality, was not from Credit Suisse First Boston),  and I took a strong position within our firm.  I am proud of the results. I asked our chairman to write a policy memo to the firm that there should never be public statements in the future when detrimental stories appear in the press.  The memo restated that the firm had no comment on the Jett situation and that the policy  of the firm in dealing with the media in such situations should be an official "no comment."

I felt proud of the firm and respected as a professional.  It was good to be "sitting at the table" and to have recognition that there was value in my point of view.  People must know that you will take a strong position for your beliefs and that you will step forward and be counted.  When you exhibit strong character and leadership, a quality organization will respond and support you in a wide range of internal and external endeavors.  You cannot use this power frivolously, or you will not be respected, but you cannot be reluctant to be professional and "do the right thing."  You will gain tremendous respect, even from those who do not agree with your position.

Career Preparation

I was not completely prepared for Wall Street when I graduated from Georgetown, but I had a solid technical preparation.  An educational institution can prepare a student specifically for a career on Wall Street, but it requires input from professors.  First, students need to know the technical aspects of finance.  But, they also need to have mentors who have the experience to provide insight into careers in the investment industry.  Very few of us realized in college what career path we would follow, and very few professionals in any industry had a person of color as a role model to offer guidance toward a career. Guidance and role models are essential for most people to have a long-term successful career.  This is a challenge for academia, and an equally important challenge is to identify talented young men and women early in their educational process.

One issue for minorities is that we do not identify our potential leaders early enough to create an effective system of role models and mentors.  I am an active recruiter at the University of Pennsylvania.  Many times we meet accountants, lawyers, and engineers who, after four years of college and work experience, recognize that they want to work on Wall Street.  It is important to think about the following questions:  How did their careers begin?  Where did they gain their first business experience?  Who identified an opportunity to them and introduced them to the process?  For bright, capable people who do not succeed, we need to explore why we did not discover them much earlier in the process.  That is a challenge for the educational process, even as early as high school.

I met one female candidate who was fluent in three languages and did her undergraduate work at an Ivy League school.  She worked for a Japanese trading company in China.  When I interviewed her, she was in her first year of the MBA program at Wharton. The only issue was that she was not on the dean’s list, and the interview committee questioned whether she had the necessary tools to succeed on Wall Street.  The interviewers did not understand what it took for this woman to achieve what she already had.  I do not think that anybody had a negative agenda in this case.  The issue was that the interview committee did not appreciate what this person had to overcome to get to where she was.

Preparation for Business

When students interview with Wall Street firms, they need to be sophisticated and they need to go beyond asking merely about the culture of the firm; having information from the "Bloomberg" terminal is only a foundation.   Candidates need to be knowledgeable about the investment business, such as credit agency reports from Moody’s and Standard and Poor’s and in-depth industry reports.  Every school needs a curriculum in which students learn the language of business and then use this knowledge and the available technology to connect to people on Wall Street.

Professors can contact the Wall Street firms to obtain research reports, which are available without charge on  the Internet.  Knowing the results of current research will help prepare students to ask serious business questions in interviews.

In January I had the privilege of hosting the Tuskegee Airmen program here at Georgetown.  I am proud that my father was an Airman and it was an honor for me to introduce Col. Harry Shepard, the leader of the Airmen, at my alma mater.  You probably recall the history of the Tuskegee Airmen as the prestigious World War II corp of black pilots in a segregated military force.  The Tuskegee Airmen have always had a common theme:  the key to success is outstanding performance and you cannot focus on the hardships or barriers you must overcome to obtain an opportunity.  You must prepare yourself, establish high goals, seek opportunity, and make whatever sacrifices are necessary to perform.

Role of Technology

I urge all of you as educators to learn both about the technology industry, to use technology in your teaching, and to incorporate it into your assignments.  Your students’ academic work is somewhat incomplete if it is not enhanced by the state-of-the-art technology.  Require your students to send you questions by e-mail so that they become as comfortable with a computer as they are with pen and pencil and a telephone.

You as professionals also need to learn how to invest in technology.  The traditional companies will continue to be important, but they have to compete in a new environment.  If you learn how to invest in technology from a personal standpoint and use that knowledge to educate students, then Wall Street will pursue your students.

This is why I feel more comfortable talking to you today than several years ago about how to prepare more minority students for careers on Wall Street. Technology has no gender and no color.  It is not a matter of trying to develop one program to deal with a limited number of students.  All of us need to identify the students with the passion to go into the investment business, and we need to identify people soon enough to mentor them and prepare them with state-of-the-art technology for a successful career in the industry.  I would like to call your attention to a particular program called sponsorship for educational opportunity (SEO), which identifies minority candidates who are prospective candidates for entry level Wall Street positions and which provides a mentoring system.

Concluding Remarks

I am optimistic about the investment industry and its environment.  I feel better about the ability to introduce people of color, women, and Hispanics to the finance industry and to the capital formation process.  This optimism is not because I think that the firms in the industry are going to change the way they operate. I think that change will occur because there are more opportunities using sophisticated technology for people to create economic value and wealth.

I think that the most exciting area in all of  technology is in education.  The whole issue of whether you build a university with bricks and mortar or with technology must be reviewed.  Business leaders and academicians need a clear understanding of these issues, and the opportunities they will present.  At the very least, we should expose students to the sophisticated technology systems and the innovative companies in the technology business. These are my views, not those of Credit Suisse First Boston.