Friday, September 19, 2008
Meltdown shakes up Wall Street's workers
By CANDICE CHOI and ELLEN SIMON, AP Business Writers
Mon Sep 15, 4:07 PM ET
NEW YORK - Steve Levy left Lehman Brothers in 2005 but called his former secretary there on Monday to offer his support. She burst into tears after answering the phone.
She wasn't the only one.
The financial hurricane that whipped through Wall Street Monday suddenly made the Street, long a source of fabulous wealth, look uncertain and scary. In New York, where a half-million people work in finance, nearly everyone was shaken, from hedge fund billionaires to secretaries from Queens.
Lehman, the fourth largest investment bank in the U.S., filed for Chapter 11 bankruptcy reorganization Monday, the same day Merrill Lynch was bought by Bank of America Corp. in a snap deal for roughly $50 billion. Meanwhile, American International Group Inc., the world's largest insurer, and Washington Mutual Inc., the nation's largest thrift bank, were rumored to be close to ruin.
"How did this mess get so big?" said Levy, who worked at Lehman Brothers Holding Inc. for seven years before leaving in 2005.
The roughly 25,000 workers at Lehman, as well as many of the 60,000 at Merrill, face a double whammy: Many will lose their jobs and the companies' plunging share prices likely wiped out much of their net worth.
At Lehman, stock and options could make up as much as 60 percent of an executive's pay and share awards vested over five years. For most employees, stock and options were about 40 percent of pay, with the same vesting schedule.
On Monday, groups of grim-faced employees walked into Lehman's million-square-foot headquarters on Seventh Avenue, many of the men wearing Lehman-green ties and the women in green shirts. One woman wore a green dress.
Lehman's doors were flanked by security guards, one with a black guard dog. Employees walked past reporters and gawkers lined up behind metal barricades, as bystanders took pictures with their mobile phones. They brought gym bags, shopping totes and Lehman travel bags to cart home personal files and pictures from their desks.
Lehman workers called professional friends up and down Wall Street to give them their personal contact information. Analysts, afraid the company's server might go down, wrote farewell e-mails to clients, signing off with their cell phone numbers and personal e-mail addresses.
News trucks were camped out outside the building and reporters were there at dawn, waiting for employees. The media had worn out their welcome: A coffee truck by the company's office put up a cardboard sign last week saying, "No coffee for Lehman reporters."
In brief interviews, workers in New York who requested anonymity described themselves as shocked and devastated.
"We really didn't see this coming. We thought some bank would buy Lehman," said Duo Ai, who worked in research in Lehman's London office. "Any other option would be better than this."
The consensus in finance was that this would just be one more in a succession of grim days following the mortgage bust.
"It's like a bad flu," said Steve Schlussler, a director at CapitalSource, a smaller financial firm near Lehman. "You have to get violently ill to get better."
"The Fed can't bail everyone out," he said.
For workers, the year has brought waves of layoffs — some announced cuts of thousands of jobs, some quieter culling of hundreds. Wall Street firms have slashed the ranks of contractors and hacked at expenses like car service and business travel.
"The Wall Street that we knew was gone when we woke up this morning," said Anthony Conroy, head trader for BNY ConvergEx Group, who said he worked a 12-hour day Sunday and arrived at his office Monday at 5 a.m.
Bad times in finance mean bad times in New York City, because the sector is an outsized proportion of the city's total payroll.
While finance and insurance account for only 7 percent of the jobs in Manhattan, the sector accounts for one-quarter of total pay, according to the Census Bureau. The Street's bankers, techies and messengers brought home a grand total of $93.1 billion in 2006, the most recent data available.
Outsiders said the Street's veterans would rebound.
"If you're a trader, 40 percent of the time, you're wrong," said Ari Kiev, a New York city psychiatrist who treats financial sector workers and author of "Mastering Trading Stress."
"Part of job is learning how to ride out downturns," Kiev said. "You have more experience dealing with disasters than the ordinary person."
-- Associated Press
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