
1929 Tesla
Wall Street hasn’t recovered from the crash, and probably won’t.
Ever since Lehman’s bankruptcy in September 2008 jettisoned some 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 after 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 if 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.
A former Lehman trader at the Times Square concert summed up the zeitgeist more bluntly.
“Everybody is miserable,” said the trader, who like many still working on Wall Street declined to be quoted by name because his firm prohibits employees from speaking to reporters. “Everybody’s leaving who can, or they’re being squeezed out.”
I sold a $4 million house last year to a banker who told me, “I could buy a $9 million house (and he could have), but I want to be financially conservative”. Naturally I thanked God for sending me a client who viewed the purchase of a $4 million house as being “financially conservative”, but the fact is, that was one less sale of a $9 million house. I also have had clients who either deferred purchases or dropped their price ceiling by as much as $1 million when they found out how much of their bonus was going to be deferred: 90% in some cases. I suspect that sort of thing is happening all across the market.