Wall Street traders sing the blues
NEW YORK — For a night, it was like the good old days on Wall Street.
Bankers and traders in dark suits flocked to a Times Square blues lounge to sip cocktails and catch up after work. What made this gathering different was what was on the marquee outside: “LEH Rocks On.”
The LEH referred to the old stock ticker of Lehman Bros., the investment bank whose collapse five years ago this week set into motion the worst financial crisis since the Great Depression. This was a reunion of former employees, all watching the bank's former house bands jam cover songs such as the Talking Heads' hit “Burning Down the House.”
The night brought back memories at the tight-knit bank. And it took the former employees back to the days when Wall Street jobs meant fatter bonuses and wanton splurging.
“We made a lot of money in those days, and we never thought it was going to end,” said one former Lehman investment banker at the event inside B.B. King Blues Club & Grill.
But it did. For many who work in finance, gone are the days of bottle service at posh Manhattan clubs.
Gone are the firm-funded lavish holiday parties with models hired as waitresses and indoor snow machines. Gone are free massages at the office, the private jets and the weekend skiing trips to Aspen.
“It was faster and looser,” said Paul Altomonte, an information technology specialist who used to work at Lehman. “Money doesn't flow as freely.”
Ever since Lehman's bankruptcy in September 2008 jettisoned about 26,000 employees, waves of subsequent layoffs have stripped thousands of Wall Street traders, bankers and analysts of their six- and seven-figure salaries and bonuses.
New York City lost some 28,300 securities industry jobs during the financial crisis that followed Lehman's demise, according to estimates by the New York state comptroller's office. That doesn't include the thousands more that vanished from hedge funds and private equity shops.
Only 8,500 of those jobs have come back in the past few years, according to the comptroller's office.
“In past recoveries, Wall Street has been a driving force. That hasn't been the case this time around,” said Kenneth Bleiwas, deputy New York state comptroller.
What's more telling is that members of the current crop of Wall Streeters just aren't making the same kind of money that they were before, even though the nation's banks are racking up record profits. The comptroller's office said the average salary has fallen by about $40,000 since 2007.
Moreover, bonuses have declined sharply. In 2006, the average Wall Street bonus was $191,360, according to the comptroller's office. Last year, it was $121,890.
“Five years ago, you almost had unlimited horizon of opportunity, of what you could create or how much you could make,” said Greg Gentile, who was a Lehman credit trader and played guitar at the blues lounge. “That's been severely limited and capped by regulation and by just a massive decrease in the risk appetite of the institutions.”
One 40-something stock trader who has bounced around major Wall Street investment houses complained of a “morose” mood in his line of work. Bonuses these days are often deferred, tethering traders to their firms longer than they wish.
The Financial Crisis Inquiry Commission blamed rapacious compensation as a contributor to the crash. The Occupy Wall Street movement and persistent howls to jail bankers for wrecking the country's economy didn't make life easier in Manhattan's shiny skyscrapers, either.
The upheaval came against a backdrop of government and popular ire aimed at Wall Street. Congress and federal agencies imposed a slew of new regulations, while prosecutors have roiled the industry with civil and criminal investigations into white-collar chicanery.
“Everybody is chastened by what happened. Everybody knows someone who is unemployed or has been unemployed,” said Karen Bodner, 41, who has lost two finance jobs since Lehman collapsed. “People are absolutely more cautious personally, because we all know that the worst can happen.”