UnoccupyWallStreet: As 200,000 Depart, And The Rest Face Plunging Bonuses, A Look At Wall Street From The "Other Side"
“This is something very different,” said Huw Jenkins, a former head of investment banking at UBS AG who’s now a London- based managing partner at Brazil’s Banco BTG Pactual SA. “This is a structural change. The industry is shrinking.” In his latest profile piece, Bloomberg's Max Abelson captures some of the very much unspoken and tacit changes on Wall Street, which over the past several years has become the poster child of all that is wrong with the world, despite the fact that Wall Street does not exist in isolation from Washington, and the true enabler of all the criminal behavior are those men and women in the US Congress and Senate, whose conscience can be bought by the highest bidder. And while not a single person in DC is going to lose their job over the economic catastrophe of the past several years, Wall Street is preparing for one of the biggest layoff rounds ever. As Abelson reports, "John Brady, co-head of MF Global Inc.’s Chicago office, was having a vodka cocktail at the Ritz- Carlton in Naples, Florida, overlooking the Gulf of Mexico, on the day his company reported its largest-ever quarterly loss. "Wow, the sun just set,” Brady said to his wife and two colleagues attending a conference with him, he recalled in an interview. “I hope it doesn’t set on MF Global.” A week later, on Oct. 31, the firm led by former Goldman Sachs Group Inc. co-Chief Executive Officer Jon Corzine collapsed. Brady and 1,065 colleagues joined a wave of firings that has washed away more than 200,000 jobs in the global financial-services industry this year, eclipsing 174,000 in 2009, data compiled by Bloomberg show. BNP Paribas SA and UniCredit SpA announced cuts last week, and the carnage likely will worsen as Europe’s sovereign-debt crisis roils markets." While it will hardly evoke nary a tear from most, those curious at how the "other side" is faring with what may well be the worst bonus season on Wall Street, and the biggest layoff wave, in 3 years are encouraged to peruse the following profiles.
In interviews, a dozen people who have lost jobs at firms including Societe Generale SA, Royal Bank of Scotland Group Plc and Jefferies Group Inc. described a grim banking landscape that also includes Occupy Wall Street protests against unemployment stuck above 9 percent and income inequality.
“These are by far my darkest days,” said Scott Schubert, 49, who was dismissed in late 2008 as a mergers-and-acquisitions banker at Jefferies, a New York-based securities firm, and has been unemployed since. “It’s harder and harder to look for a job and feel that there’s nothing there.”
Europe at the forefront:
Banks, insurers and asset managers in Western Europe have been hardest hit, announcing about 105,000 dismissals this year, 66 percent more than the region’s losses in 2008 at the depths of the financial crisis, Bloomberg data show. The 50,000 job cuts in North America this year are more than twice last year’s and fewer than the 175,000 in 2008.
At least therapists are laughing all the way to the bank
Neil Brener, a psychiatrist whose patients work in London’s City and Canary Wharf financial districts said the stress is contributing to panic attacks, binge drinking and chest pains.
“Because there are fewer jobs, people are unhappy about being stuck,” Brener said. “They don’t have options about moving, and there is a sense of feeling trapped.”
London hiring could be frozen next year, according to the Centre for Economics and Business Research Ltd. Headcount in the City and Canary Wharf may fall to 288,225 by the end of the year, 27,000 fewer than in 2010 and the lowest since at least 1998, when there were 289,666 jobs, according to the London- based research firm.
There is hope... In 2023!
Wall Street won’t regain its lost jobs “until about 2023,” Marisa Di Natale, an economist at Moody’s Analytics in West Chester, Pennsylvania, said in an e-mail.
That’s not encouraging for Michael Reiner, 44, who lost his job in June as a credit strategist in New York for Societe Generale, France’s second-largest bank, whose shares are down 60 percent this year. When he called his wife to tell her the news, she was home watching “The Company Men,” a film about corporate downsizing, he said.
It wasn’t the first time Reiner had lost a job on Wall Street. He worked at Bear Stearns Cos. for 14 years until the firm collapsed in March 2008 and was taken over in a fire sale by JPMorgan Chase & Co. He said he was happy to have some time off with his family and go to Little League baseball games.
When he began looking for a job, he “wanted to find a place for the next 14 years,” he said. A recruiter brought him to Paris-based Societe Generale. It didn’t last that long.
It’s harder to talk about losing a job the second time, Reiner said. “There are a lot of people I haven’t told.”
Opportunities for employment “evaporated” as the European debt crisis escalated, he said. Now he spends his time going to his daughter’s field hockey games and managing his investments. He’s planning to make maple syrup from the trees in the backyard of his home in Briarcliff Manor, New York.
It is so bad that Jefferies, the bank that would hire everyone else who has been laid off (mostly by UBS), is also firing now:
For Schubert, the former Jefferies banker in his third year looking for work, the longer he’s out of a job, the harder it is for him to tell his 10-year-old son to do his homework, he said.
“It might seem outwardly to him that I’ve given up,” he said in an interview this month from his four-bedroom home in Glen Ridge, New Jersey. “I can’t come to the table and say, ‘Well, when you were five, I worked nonstop.’”
Schubert, who received a master’s degree in business administration from New York University in 1989 and was a managing director specializing in middle-market M&A deals at Jefferies, said he wasn’t surprised when he lost his job in 2008 during the financial crisis. He thought unemployment would last 12 months at most.
“The first year out was fruitless,” he said. “There wasn’t much hiring going on at all.”
By the middle of 2010, more potential employers seemed interested, and he felt “something was imminent,” he said. Nothing happened.
This year, he has become increasingly disheartened by bad news on Wall Street, and it’s more difficult to stay in touch with former colleagues as time goes by, he said.
And then there is that other thing. Money.
“Unfortunately, the industry always seems to get it wrong and they over-hire,” said Philip Keevil, 65, a former head of investment banking at S.G. Warburg & Co. and now a partner at New York-based advisory firm Compass Advisers LLP. “They are over-optimistic and then periodically throw large numbers out.”
Morale on Wall Street and London is “probably as bad, if not worse” than it has been in decades, said Keevil.
Wall Street bonuses are expected to fall in 2011 from the $128,530 average last year, DiNapoli, the state comptroller, said in October. Even so, when Goldman Sachs set aside 24 percent less to pay employees in the first nine months than in the same period last year, the amount, $10 billion, was equal to $292,836 for each of its 34,200 workers as of Sept. 30. That’s nearly six times the median household income in the U.S., where 49.1 million live in poverty, according to Census Bureau data.
Like we said, "nary a tear"..
Wyatt Laikind, 26, made three times as much in his first year out of college working at Citigroup Inc. as his single mother earned when he was growing up in western Massachusetts.
“It was like winning the lottery to get that job,” said Laikind, who worked as an associate on the New York-based bank’s high-yield credit-trading desk.
He got a job on Wall Street because he “was under the impression that it was a more meritocratic environment,” and “my hard work and intelligence would be paid off,” he said.
At first, he liked the excitement, he said. Then, after financial regulations curtailed proprietary trading, the job became “less appealing.” He said he didn’t like smiling at clients while having to figure out how to profit from them.
In July, after a vacation, he called his boss to quit, he said in an interview from Quito, Ecuador, where he is now working for Equitable Origin LLC, a start-up that offers a certification system for oil exploration. His salary is less than 5 percent of what he made at Citigroup, he lives with intermittent hot water, and he was robbed at knifepoint last month, he said.
“I feel happier on a daily basis,” Laikind said.
That was then. And this is now.
His tone was different in a later e-mail.
“I wasn’t brought up in luxury, so I like to think I can tough it out,” he wrote, describing the sagging mattress he slept on in jeans and a hooded sweatshirt to stay warm. “But I may have to give it up and try going back to finance soon.”
And that's just it: as Wall Street, long accustomed to the best in life, wakes up to the harsh realities of life on Main Street, it will be precisely these (in)voluntary defectors that will soon be some of the most vocal enemies of the old establishment that kept them paid, fed, and covered their expense accounts. Because if there is one thing that dies the hardest, it is old habits.
Moral of the story: know your bankers today - tomorrow they may well be the leaders of the new resistance...