It’s “the end of Wall Street as it has been known for decades,” the Wall Street Journal declared last Sunday, and for decades, politicians had touted home ownership as a vital part of the American dream. America’s unyielding pursuit of that dream has now led to a catastrophic number of foreclosures nationwide, and indeed has taken down half of Wall Street with it. The fallout won’t just affect those who have seen their homes foreclosed on; it will affect thousands of families whose breadwinners went to work in midtown Manhattan each morning and staked their own dreams on stock options in Bear Stearns or Lehman Brothers, where they’d worked perhaps for decades. In turn, it will affect Colgate graduates in 2009 and beyond as they find belts are being tightened and wallets being closed all across the financial services industry.

It all began in March with the collapse of Bear Stearns, as whispers of their insolvency caused panic in the marketplace and stock shares plummeted. In turn, other banks began to charge increasingly large rates for credit default swaps, refusing to lend Bear Sterns money to carry out its day-to-day operations without a huge premium. Of the firm’s failure, Emmy-winning FOX Business anchor Liz Claman told me she’d secured the first tell-all interview with a trader on the Derivatives desk who watched it all happen.

“He told me people were shell-shocked, walking around like zombies. The whole thing came toppling down in a mere 5 days. He said people were rushing in on a Sunday to polish their resumes and grab what they could,” she said.

JP Morgan Chase rode to the rescue with a $30 billion dollar package backed with $29 billion from the Federal Reserve, effectively turning CEO Jamie Damon into a Wall Street superstar. While Treasury Secretary Paulson was declaring the potential crisis contained, it was becoming increasingly apparent that almost every investment house had had a similar lack of foresight: they’d purchased countless mortgage-backed securities (investment portfolios filled with mortgages at varying levels of risk) while keeping relatively tiny amounts of capital on hand to pay for them should they deflate in value.

Deflate they did. As high-risk homeowners continued to default on their mortgages, those securities plummeted in value and banks like Bear were saddled with tens of billions of dollars in debt and forced to sell their most profitable divisions and assets to try to make up the difference. Ultimately, they could not keep ahead of the tidal wave of depreciating assets, and the largest credit shock and restructuring since the Great Depression got underway. Bank of America stepped in and purchased Merrill Lynch for a fool $29 per share. Paulson and Fed Chairman Ben Bernanke, looking to make an example of one of the banks, refused to help Lehman Brothers sell itself, ultimately forcing the firm to file the largest Chapter 11 claim in history and allowing Barclay’s to snag Lehman’s valuable brokerage divisions for a bargain $2 billion, then discard the rest. Paulson and Bernanke rode to the rescue of AIG, the nation’s largest insurer, instead and helped the U.S. government purchase an 80% equity stake in the company. Meanwhile, they were recruiting banks across the globe to create a $70 billion pool of liquidity from which ailing firms can borrow at the high rate of 850 basis points over the standard LIBOR rate.

Fannie Mae and Freddie Mac, the governmental service entities (GSEs) who collectively back $5 trillion in mortgages, or nearly half of the U.S. total, were also rescued by the feds, as they agreed to make quarterly capital infusions into the mortgage giants’ books to combat the continuing depreciations in their tainted securities.

The final nail in a relatively free-wheeling Wall Street’s coffin came just days ago on Monday, when the last two major investment banks standing, Goldman Sachs and Morgan Stanley, ceased to be investment banks at all. Both would now become “bank holding companies,” which meant they would have increased access to emergency funding from the Federal Reserve discount window but would submit themselves to increasing government regulation, likely changing the fundamentals of their business models forever.

With perhaps one in five Colgate students looking for some type of financial services job, the impact of this melee will likely be deeply felt here in Hamilton. In fact, many students on campus refused to comment for this piece for fear of jeopardizing positions they’d already secured through summer internships.

Ursula Olender, the Director of Career Services, had plenty of words of assurance, though.

“The finance community is extremely aggressive in recruiting… While visiting campus to recruit summer interns last Monday, an alumnus who is a managing director at Merrill Lynch reminded students that ‘with adversity comes opportunity.’ The best advice I can give is to partner with [us]. We have been through tough times before and have a track record of success when working with students to achieve of their goals.”

Claman, who’s also the author of The Best Investment Advice I Ever Received, had similar sentiments.

“Will new niches open up in the financial field in the wake of the crisis?” Claman asked about new opportunities that may now appear in now expanding institutions like the Fed and the SEC. “Look what happens after a forest fire — total devastation, but soon plants start to grow where they never had before.”

Olender also stressed that this is not the worst possible time for such a radical restructuring to take place.

“The worst time would probably be in late spring, when many seniors have typically secured job offers in this sector, as has been the case during past tough times,” Olender said. “Some alumni will recall the dot-com bubble in the late 1990’s when many had job offers in hand only to see them rescinded.” That won’t be as likely to happen this time around.

“Smart firms are always looking for talented candidates,” Olender said.

It seems Colgate students have taken all that advice to heart.

“I am extremely optimistic about the future,” senior Geoff Adler said. Adler had a summer internship with Lehman Brothers’ Natural Resources Investment Banking Group and also spent time last year in their London offices.

“Students should work to position themselves now so that when banks open for interviews very soon, Colgate students will be the first applicants through the doors.” He was heartened by the fact that Barclays had acquired most of Lehman’s U.S. operations and that those jobs would be preserved.

“Every bank knows that their operations and future depend on bringing young workers into the firm,” Adler said.

As for Claman, she had just one caution for students at Colgate and across the country.

“The worst thing you could do as a graduating student is buy into the hype that no one is going to hire you.”