Not so long ago, when a bulge-bracket firm like Merrill Lynch laid off 75 investment bankers, the news would be splashed across the front page of The Wall Street Journal ‘s Money & Investing section. Beat reporter Charles Gasparino would break the story, citing a highly placed, close-to-the-matter source, and Merrill would refrain from comment.
Investment banks retrenching, highly paid bankers hitting the Street: This was news.
Merrill Lynch’s most recent cuts, on July 18 and 19, merited little more than a two-paragraph mention in a trade publication, accompanied by a statement from the firm saying, “There have been and will continue to be selective staff reductions.”
But what was once a dirty little secret is now a bold-faced fact: There is a major job recession on the Street, and the overwhelming sense is that, with at least 1,500 investment-banking jobs already gone this year, it’s going to get worse before it gets any better. That reality was made painfully clear by Dresdner Kleinwort Wasserstein’s recent announcement that it would cut its banking ranks by 1,500–with the knife’s sharpest edge to be felt in its New York offices.
But the Merrill moves highlight another fact: No longer are just underperforming bankers getting the ax (Wall Street flacks and C.F.O.’s prefer to call it “attrition”). And it’s not just those made superfluous by another big merger. These days, anyone can be let go. Indeed, the joke within Merrill now is that if you’re not working on a live deal–even if you’ve just closed a major one–you are liable to get fired.
“It’s not the underperformers anymore; the cuts now are across the board,” said Wall Street recruiter Cynthia Remec. “Many of those laid off [at Merrill] were people I’d spoken with in the last six months and begged to leave. But they all said, ‘No, I’m going to be loyal to the firm because they have taken care of me.'”
So what does a down-on-his-luck banker do once he’s out of a job? He gets himself right back into the hunt, and quick. A year or so ago, a fired banker could chalk it up to internal politics or bad luck. He or she would take six months off, do some traveling, hang out with the family and then get back into it, maybe even trade up a bit. Not anymore. Now, as the ranks of well-qualified ex-bankers increase by the week, laid-off bankers are hitting the phones immediately, and this time with more than just a little bit of fear in their hearts.
“There is definitely no cockiness at all anymore,” says Ms. Remec. “The big emotions now are disbelief and a total shock to their self-esteem. These guys had worked so hard and had been told over and over again what stars they were. ‘How could this have happened to me?’ they are saying. ‘I just got my review six months ago, and I was at the top of my class.’ No one is feeling cocky.”
The prevailing wisdom is to network like hell. That’s fine, but these days there are fewer places to network. Not only are fewer banks hiring–save for the occasional poach from a rival firm to fill a specific need–but thanks to the many mergers of the past few years, there are also fewer banks.
Indeed, the bitter truth seems to be that once you’re on the outside, getting back in will be harder than ever. So you bet people are scared.
Which brings up the question: Who’s next? Some people on the Street seem to think it’s Goldman Sachs. The New York Post reported last week that bonuses there for high-level bankers would be eliminated and that layoffs might follow.
And while the story may well have overstated the case–yes, bonuses will be down, but no top-tier Wall Street banker walks away with nothing–there is no doubt that Goldman’s bankers, along with others on the Street, are nervous.
“We are getting a lot of calls from Goldman people,” says Ms. Remec. “It hasn’t happened yet, but they know it’s coming soon. They are very, very scared.”
Goldman Sachs declined to comment.
Hunting for Treasures–Finding Louis Lefkowitz
Lifting the lids on a bunch of dormant safe-deposit boxes and auctioning off the contents has a vaguely romantic appeal to it–something short of a treasure hunt, but one step above Antiques Roadshow .
The reality is much more mundane.
Twenty-four lots taken from abandoned safe-deposit boxes were auctioned on July 26 by Doyle New York, an auction house specializing in estate property. This year’s safe-deposit auction was the smallest in Doyle’s history. Dime Savings was the only bank to participate in the annual event.
Doyle cites the mergers of so many banks as the reason for the low number of lots this year. Banks immersed in the complicated paperwork and legal tasks involved in consolidation often don’t consider it a top priority to empty dormant boxes and track down the contents’ rightful owners–especially as the process can take as long as two years, said Louis Webre, Doyle’s vice president of marketing.
According to the State Comptroller’s Office, charges on a safe-deposit box must go unpaid for three years before it can be considered abandoned in New York. If the rightful owner of the box is not found, the contents may be sold.
This year, the 24 lots grossed $6,135. Out of that, Doyle takes its commission and the bank gets fees and back rent on the boxes; the rest is added to the estimated $4 billion in unclaimed funds collecting interest in Albany.
There have been times when some true treasures were uncovered at Doyle’s safe-
deposit-box auctions. In 1993, a Cartier necklace was found, put up for auction and sold for $1.3 million.
This year, the highest bid was $1,100 for a white gold ring with synthetic sapphires and three diamonds. The lowest amount paid was $15 for one lot of three U.S. silver dollars. All in all, the lots consisted mainly of watches, diamond rings and rare currency.
Although the auction lasted close to three hours, only one half-hour was spent auctioning off the safe-deposit lots. In the past, safe-deposit-box auctions have taken entire days. To supplement the meager contents of this year’s auction, Doyle added 282 lots containing consigned property from various estates and a children’s hospital.
Also in the mix were goods from Doyle’s own collection, most of which were accumulated during the auction house’s “broom-clean” procedure. According to Mr. Webre, hundreds of Doyle vans empty out consigned or purchased estates every year, leaving everything “literally broom-clean.” Whatever is found to be inappropriate for auction, Doyle donates to charities.
All of the safe-deposit items up for auction seemed like something you’d find–well, in a safe-deposit box: stamp collections, rare U.S. bills, gold watches, costume jewelry. But the “broom-clean” items looked like the detritus of a dustpan–or the treasures a 5-year-old finds in his great-grandmother’s sock drawer. Sorted into shoebox-sized plastic bins were seashell jewelry (which went for $30), half-full perfume bottles ($35), plastic beads ($5) and assorted buttons ($45), among other doodads.
But one of the broom-clean containers held links to a venerable character of New York’s past–one who may even have had a say in how such auctions are held.
A container held two medallions with the name Louis J. Lefkowitz on them. New Yorkers of a certain age will remember Lefkowitz as the New York State Attorney General from 1957 to 1978; a 1961 Mayoral candidate; a member of New York’s liberal Republican triumvirate (Rockefeller, Javits, Lefkowitz) and the dean of consumer-oriented, law-making attorneys general nationwide.
Contacted later, Lefkowitz’s daughter-in-law said the medallions had been left when Lefkowitz died in 1996.
“Doyle came and made a bid on the things we didn’t want when my father-in-law died,” Dinah Lefkowitz said. “I guess now they’re selling it off.”
Altogether, there were 10 medals, which sold for $110 to a man from Pennsylvania. He had never heard of Lefkowitz.
–Anna Jane Grossman