After the Collapse: Taking Stock of the Key Players, Five Years Later

Lehman Brothers put their artworks up for auction.

Lehman Brothers put its artwork up for auction. (Photo by Getty Images)

So here we are, five years after the fall of Lehman. And where the hell is Dick Fuld, anyway? Talk about skulking away never to be seen again. At least Bear Stearns’s Jimmy Cayne unburdened himself of his delusional and self-serving rage in William Cohan’s 2009 best-seller, House of Cards.

In fact, the only people whose place in the history books has remained unchanged since 2008 are those who left the scene in disgrace when it was all going down—the likes of Mr. Fuld, Ken Lewis, John Mack, John Thain and Vikram Pandit, once-respected Wall Street honchos who all proved that they weren’t the geniuses their outsize pay suggested but simply lucky enough to have managed to ascend to the top job during a financial bubble of unprecedented proportions. As for those who’ve stayed in the game, here’s my take.

Took a Blow But Came Back Stronger: Goldman Sachs

So it’s true. The Goldman guys really are better than everybody else. Yes, they had to endure the great reveal: This is a group of people who are not only capable of but actually inclined to screw their own customers over in pursuit of an extra buck. It took decades to build Goldman’s powerful franchise as a client-focused investment-banking powerhouse, and one generation of leaders took the low road of the easy profits available by abusing that position through the trading side of the business—ABACUS, anyone?—instead of the high road (and harder work) of continuing to out-hire, out-think and out-work the rest of the pack. (The Goldman-front-running-its-own-clients story is the White Whale of financial journalism. Everybody says they do it, but even those who are convinced it has been done to them are too afraid to call them out publicly.)

Now that the cat’s out of the bag, though, they’re back to doing what they do better than anyone else, which is making huge piles of money. After a brief experiment with humility, they’re also back to giving the rest of us the middle finger. In the wake of the indictment of SAC Capital, Goldman Chief Operating Officer Gary Cohn told an interviewer, “They’re an important client to us; they have been an important client to us.” And Lloyd Blankfein told CNBC two weeks ago that the reason the bank hadn’t withdrawn its liquidity support for the beleaguered hedge fund was because it could “vaporize” the hornet’s nest of insider trading. That’s probably true, Lloyd. But it also would have been true that, if manufacturers had deprived Al Capone of bottles in which to ship bootleg whiskey, he wouldn’t have been able sell it to Nucky Thompson. Even criminals need suppliers. But let’s get real here. Goldman doesn’t give a shit what anybody thinks. They never have, and they never will.

Flew a Little Too Close to the Sun: Jamie Dimon, Chairman and CEO of J.P. Morgan Chase

It would have taken a miracle for the reputation of any Wall Street individual to have improved since the fall of Lehman, and miracles have been in short supply since 2008. The man whose reputation took the biggest hit? That would be Jamie Dimon. The brash and outspoken leader of J.P. Morgan Chase enjoyed a near-deification when astute risk management left his the only large bank in the country that didn’t teeter over the precipice in 2008, allowing it to snap up both Bear Stearns and Washington Mutual at fire sale prices.

Things haven’t gone so well in the intervening years. Washington tired of his grandstanding and has been exacting its revenge in the form of billions of dollars in fines for everything from the London Whale to mortgage fraud and the rigging of commodities markets. The $11 billion settlement in play with the Justice Department is not only of unprecedented size, it’s also a tacit admission of a failure to lead. Whether or not you believe Mr. Dimon is personally corrupt—and I do not—is one thing, but he’s shown an inability to convince all of those who work for him to do the right thing. And there’s another conclusion that’s pretty hard to avoid: J.P. Morgan Chase isn’t that much different than the rest of Wall Street. As the only remaining big-name target worth attacking, Mr. Dimon is learning the downside of being No. 1. He’s still the best big-bank CEO of his era, and he’s still standing—but with diminished stature.

The Sleeper: Preet Bharara, U.S. Attorney for the Southern District

While a bloodthirsty public harps on the fact that few of the Street’s top dogs have been criminally charged for crisis-era transgressions, one man has been doing his part to remedy the situation. Although Preet Bharara’s most high-profile successes have come in insider trading cases rather than housing-crisis-related ones, he’s compiling an enviable record in the former: Through the summer, his office had racked up more than 70 insider-trading convictions.

I once asked Mr. Bharara why the U.S. Attorney’s Office didn’t prosecute more people. He told me that, with limited resources, he and his colleagues had to restrict themselves only to those cases that they felt sure they would win. I buy that. And he does seem to know how to pick them, most notably, the charges against Galleon cheat Raj Rajaratnam and his arrogant sidekick, former McKinsey chief Rajat Gupta.

Bharara’s biggest fish is still not quite in the net. That would be none other than the elusive Steve Cohen of SAC Capital. A settlement seemed in the offing last week, but Bharara’s unexpected decision in July to indict SAC Capital Advisors itself showed both boldness and creativity, as well as the intention to put an end to Cohen’s ability to manage anyone else’s money but his own, if not put him out of business entirely.

Still Hard at Work Confusing the Crap Out of Everyone: Ben Bernanke, Chairman of the Federal Reserve

You’ve got to give Ben Bernanke credit: His tenure as chairman of the Federal Reserve could have gone much, much worse. Critics who predicted that the Fed’s unprecedented monetary expansion would backfire, resulting in an immediate spiking of interest rates and collapse of the U.S. dollar standard, were wrong. And they have been reduced to the familiar move of the bearish prognosticator whose well-reasoned argument sounded great on paper but failed to pan out in the real world. They’ve simply doubled down on a forecast that has been a big money loser to date. But even a stopped clock tells the correct time twice per day.

That said, the celebration of Mr. Bernanke’s much-touted improvement of communication skills over the inscrutable (and, let’s just face facts here, insanely overrated) Alan Greenspan was premature. With the entire world expecting a tapering of the Fed’s bond-buying program in mid-September—the result of Mr. Bernanke’s own telegraphing of such—the only question seemed to be the ultimate amount of said tapering. Mr. Bernanke’s surprise decision to do nothing was not so much inscrutable as schizophrenic. At this point, it seems sure he’s either going to be remembered as one of the best or one of the worst Fed chairmen of all time, but, as economist David Rosenberg pointed out, his about-face suggests that he’s certainly guilty of Greenspan’s signature (and oft-repeated) transgression of letting the asset pricing tail wag the economic dog, as opposed to the other way around. One thing is clear: The Fed has yet to figure out an exit strategy from the most audacious monetary experiment in history.

Working Harder Than Anyone On His Own Epitaph: Hank Paulson, Former Treasury Secretary

Remember what I said about the people of Goldman Sachs not giving a damn what anybody thinks of them? Exhibit A: Bob Rubin, the man who earned $126 million “guiding” Citigroup to near-extinction while preening about like one of the only true wise men on Wall Street or in Washington. His reputation is in tatters, but he doesn’t care what you think. Who does? Hank Paulson, who followed Mr. Rubin’s footsteps out of Goldman and into a Democratic president’s Cabinet as secretary of the treasury. Mr. Paulson deserves a lot of credit for heading off a global depression with on-the-fly multibillion-dollar bailouts and a generally steady hand on the wheel of an economy on a patch of hellacious black ice. (Tap the brakes, people; don’t slam them down.)

So why does he feel the need to keep explaining himself, as he did in the (surprisingly gripping, for a movie about economics) Bloomberg-produced documentary, Hank: Five Years From the Brink, released on Sept. 16? Goldman guys don’t explain themselves to anyone, right? Because Hank’s different, people. He’s a conservationalist of great renown for starters. And … just kidding (not about the conservation part—that’s true—but about the being different part). Like every single one of his Wall Street peers, he insists with a straight face that, even if banks were the true bad actors in the crisis, the bigger problem was the flawed regulation that allowed them to give into their worst instincts. The economy was dressed like a slut, you see, so it’s her fault that Wall Street raped her.