Imploding banks – who is left with the rubble?
- Former Lehman Brothers Building on 50th and 7th Ave
I understand how some of those caught up in the implosion must feel having been through the meltdown of Bankers Trust. I remember how hard it was because the bank was such a big part of my life and I internalized it as my “business”, yet the decisions that led us to implode were made in a far off area of the bank unbeknownst to so many of us. Overnight I became the “number” I always was in someone else’s soap opera. We take it personally and for us it is personal. For many it is just business.
With the downturn in the financial sector, for many who considered it business, it is becoming personal. And for those who were the supporting cast to the masters of the universe for whom this was purely business, it is a devastating breach of trust, loyalty and confidence. After all, at most banks employees are all shareholders once they have paid certain dues. And with smart brilliant people leading the ship, as a shareholder we are talking about your ship, everyone has a responsibility to call man overboard at a time when they could do something about it.
When I came to the USA 21 years ago, I realized that major decisions are not made by you; they are made for you – you just need to recognize the circumstances. So was the Lehman situation a hopeless one from the get go? Merrill Lynch? WaMu? Wachovia? No, I do not believe so as they were the pillars of Wall Street for over 150 years. In recent times the management did not make the major decisions required because they did not recognize the circumstances – they were getting paid, the stock was rising and they were bonus focused. And the regulators…?
One of the attractions of working at the big financial institutions was that there was a career opportunity with growth, learning, advancement and the ability to accumulate wealth. A somewhat defined path to a perceived “Top” and as you advanced over time that “Top” evolved to loftier goals. And once you were in the game, there were other major players and competition drove you and your company – your stock price, earnings, top M&A bank or top bond trading ranking, etc. And for many at the “Top”, they spoke about “team” and “we” and “reward” yet below the surface of the town hall meetings and management messages, a bifurcated entity evolved between the haves and the have nots; the seniors and the supporting casts; the Investment Bankers and the administrative support; the asset managers, quants and sales teams and their supporting casts that process and document the transactions, the tech and HR teams and others.
And whether you believe working for a major financial institution is something to be considered just business, the impact on those who are losing their jobs in a down economy is both personal turmoil and major upheaval. It is a whole lot more personal for those earning on the lower end of the pay scale with little or now worthless equity. For those on the higher end of the income chart that earned big money over the years and in many cases cashed out millions along the way, the upheaval is no less jarring.
I was recently working with a turnaround pro who said about a client: It is ALWAYS a people problem. ALWAYS. Decisions made or not made get us to the positions we are in, not technology. It is decisions about the technology, about the people, about the process, or about taking action. And people need to be accountable and responsible for the decisions.
There were/are very smart people at both the banks and the regulators. If it went on for years and people got paid vast sums for building a house of cards, surely they should be responsible when it comes down? Is it okay to build it up because you can legally work the system for profit? Or have we evolved to nothing more than a legal ponzi type scheme where the masses are left holding the bag? I do understand caveat emptor but I also understand the concept that investment brokers are held to regarding the appropriateness of the investments that they buy for their clients. And even if everything over the years was done in a legit way, what decisions should the regulators have made? People say they saw it coming.
Public sympathy is very different for the two ends of the pay spectrum. While it is all relative, should sympathies be the same for someone who is struggling to pay rent or a mortgage for a small 2 roomed home, put gas in a car and food on a table for young kids compared with someone who for years earned millions who can suddenly no longer support 2 or three large homes, 2+ leased cars, extravagant travel, designer clothes, the best restaurants and hotels in the world, numerous country club memberships and more. In hindsight, it is easy tom second guess decisions made. As the government finalizes the bailout plan, sentiment is not the same for both categories of displaced bankers even though the displacement is equally personal and failure to pass the bailout will probably hurt the lower end folks more than the masters of the universe.
Comments
Extremely well researched and written! You put in a nutshell what so many thousands of people must be feeling and suffering. Hopefully they can be helped post bailout.
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