Bank of America has become the first US bank to withdraw job offers made to MBA students graduating from US business schools this summer, citing conditions laid out in its bail-out deal as the reason.
The passed $787bn stimulus bill in effect prevents financial institutions that have received money from the government's troubled asset relief programme from applying for H1-B visas for highly skilled immigrants if they have made US workers redundant.
BofA, which has received a total of $45bn (euro 36bn, £32bn) in Tarp funds, is in the process of digesting two large acquisitions - Countrywide, the mortgage broker, and Merrill Lynch - which will see thousands of jobs lost. A spokesman for the bank said: "Recent changes in legislation made it necessary for Bank of America to rescind job offers it had made to students requiring H-1B sponsorship."
The number of international students affected by the BofA move is thought to be no more than 50 but business schools are concerned that other banks in receipt of Tarp funds could follow suit.
Traditionally, about a third of MBA students at the leading US schools have taken up finance and banking jobs on graduation, with about a third of those MBAs coming from outside the US. But MBA graduates have seen the number of jobs in the finance sector shrink by about 40 per cent this year.
Some supporters of freer migration have criticised the Tarp measure for threatening to cut the US off from foreign talent and encouraging tit-for-tat retaliation by foreign countries.
Business school deans are concerned about the implications and are lobbying hard for the interpretation of Tarp to be generous in regards to MBAs.
Some fear that students who have traditionally studied in the US to get a job in North America may go elsewhere. "There might be an inclination for people from around the world to vote with their feet," says David Schmittlein, dean of MIT's Sloan school of management in Boston.
That would be a further blow to US business schools, which are trying hard to internationalise their student body and curriculums. This year the credit crunch meant that many international students, who do not have access to US federal loans, were unable to raise the financing to embark on a two-year US MBA, resulting in a drop of up to a 20 per cent in applications.
Copyright The Financial Times Limited 2009
