Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits (9 page)

BOOK: Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits
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SOMEWHERE AROUND THE
one-year mark of my immersion with young Wall Street analysts, an odd thing happened: I started to make friends.

I came to my finance-industry investigation, I must admit, with a fair bit of skepticism. Wall Street, after all, is a place of excess and vice, where time is measured in scandals and convictions, and I still hadn’t forgotten that the work young analysts did, no matter how banal it was day to day, served a complicated and problematic agenda. But as I got to know the eight analysts I shadowed on an individual level, I found that they made for good company. They were smart and charming. They had self-deprecating senses of humor about the financial industry and their roles within it. And they were typically thoughtful enough to acknowledge that while being a young banker wasn’t always fun, it was a hell of a lot better than being unemployed.

I brought this up with a nonbanker friend of mine. She winced.

“Do you think you’re getting the whole picture?” she asked. “Are you sure you’re not just talking to the ones you find tolerable and ignoring the douchebags?”

She had a point: I did have a douchebag deficit, and my project had an inherent selection bias. My banker sources were atypical by definition—daring or disillusioned enough to be willing to risk getting fired by talking to me, and kind and introspective enough to spend hours at a time answering probing questions about their lives. They had all bought in to some portion of the financial world’s value system, but they all considered themselves outsiders.

To correct for the possibility of missing the whole picture, I decided to try to find the dark heart of young Wall Street—to venture past the likable into the utterly unredeemable. I decided to go to Fashion Meets Finance.

Fashion Meets Finance is a singles mixer series with a simple premise: take several hundred male financiers, put them in a room with several hundred women who work in the fashion industry, and let the magic happen. The series was started in 2007, and it is predicated on the idea that male Wall Streeters and female fashion workers, as the respective alpha ascenders of their tribal clans, deserve to meet and procreate, preserving the dominant line in perpetuity. It’s social Darwinism in its purest, most obnoxious form.

“Women in fashion need men who can facilitate their pre-30 marriage/retirement plan,” read one early invitation. “And men in finance need women who will allow them to leverage their career in their dating equity.”

Fashion Meets Finance hit a snag in 2008, when the financial sector nearly collapsed, taking bankers down a few notches on the Manhattan social ladder and necessitating a brief hiatus. But in 2009, it returned with a vengeance. Its organizers proclaimed proudly:

2008 was a confusing time, but we are here to announce the balance is restoring itself to the ecosystem of the New York dating community. We fear that news of shrinking bonuses, banks closing, and the Dow plummeting confused the gorgeous women of the city.…The uncertainty caused panic which caused irrational decisions—there’s going to be a two-year blip in the system where a hot fashion girl might commit to a pharmaceutical salesman.…Fashion Meets Finance has returned to let the women of fashion know that the recession is officially over. It might be a year before bonuses start inflating themselves again, but it will happen. Invest in the future; feel confident in your destiny. Hold on. It will only be a couple more years until you can quit your job and become a tennis mom.

I almost admired the candor with which Fashion Meets Finance accepted noxious social premises as fact. (One early advertisement read, “Ladies, you don’t need to worry that the cute guy at the bar works in advertising!”) But others disagreed. Gawker called one gathering “an event where Manhattan banker-types and fashion slaves meet, consummate, and procreate certain genetics to create lineages of people you’d rather not know.” There was no question that if my goal was to find the worst Wall Street had to offer, I emphatically
did
want to know the people who would be commingling inside Bar Basque, the overpriced Vegas-style restaurant and bar where the event was being held.

After signing in with the bouncer, I pushed my way past a few leggy blondes in strapless dresses and heels to the outdoor deck. There, dozens of men with well-tailored suits and good hair were crowding around the open bar, which was sponsored by a midshelf vodka company. Most of the women formed a loose ring around the periphery of the deck, waiting for financiers to approach them. I guessed there were five hundred people in total.

“What does this whole thing stand for, if you think about it?” a Wall Street trader standing near the door asked me. The trader, who had slicked-back hair, a shirt opened to midchest in order to allow his prodigious chest hair to topple out, and a pair of Gucci loafers on his feet, answered his own question: “It’s a bunch of gold diggers looking to take advantage of guys who are looking to take advantage of gold diggers.” He laughed. “It’s sort of perfect, huh?”

This installment of Fashion Meets Finance, held after a yearlong break, had undergone a significant rebranding. Now, it was being billed as a charity event (proceeds were going to a nonprofit focused on Africa), and the cringe-worthy marketing slogans had been erased. Now, the financiers and fashionistas were joined by a smattering of young professionals from other industries: law, consulting, insurance, even a few female bankers.

I met up with Beth Newill, a fashion marketer who started Fashion Meets Finance in 2007, and who said that the social and romantic appeal of finance jobs, while better than it was at the depths of the crisis, had still not attained its full pre-crash glory.

“Back in the heyday, you could drop that bomb of, ‘I’m in finance,’ and women would be like—‘Golden ticket!’” she said. “That’s changed.”

And indeed, the first few men I met at Fashion Meets Finance told me about the fading allure of their line of work.

“I don’t even mention what I do for work to girls,” a young hedge fund trader told me. “In 2008, with all the stuff happening, I felt bad. When you’re associated with a hedge fund, you’re seen as taking away people’s mothers’ retirement money.”

“I tell people I drive the 6 train,” said the hedge funder’s friend, a J.P. Morgan banker, who was standing next to him swirling a Maker’s Mark on the rocks.

I believed them, and I could see the appeal of their strategy—in the months following the crisis, if I had been a single banker out on the town, I’m not sure I would have wanted to lead with my job, either. Still, claims of shame and self-consciousness were fairly rich coming from guys who had bought tickets to an event specifically designed to allow them to take advantage of their occupations.

After a few hours of drinking and socializing, I had filled my douchebag quota many times over. I had seen and heard the following things:

  • A banker showing off his expensive watch (which he called “my piece”) to a gaggle of interested-looking women. 
  • A former Lehman Brothers banker explaining his strategy for picking up women. “I use Lehman to break the ice—you know, get their sympathy. Then I tell them I make twice as much as Lehman paid me at my new job. They love my story, and then they end up in my bed.” 
  • A private equity associate using the acronym “P.J.” to refer to his firm’s private jet. 
  • A hedge fund trader giving dating advice to his down-and-out friend: “Girls come in many shapes and sizes. But just remember: when you hold them by the ankles and look down, they all look the same!” 

As the night wore on, I identified the two primary strains of Fashion Meets Finance attendees. There were the merely curious, the people who had heard about the event from a friend and were intrigued enough about the premise to pay $25 for a ticket. These people mainly stood or sat on the perimeter of the roof deck, where they could observe (and, in some cases, laugh at) the commingling of the other partygoers.

And then there were the true believers. A portion of the attendees at Fashion Meets Finance seemingly had no idea that the event had become a punch line. They were bankers and fashionistas who were determined to find their matches at a superficial singles mixer, and they had no qualms about it.

“I want the real deal!” said one female fashionista, who was sprawled out on a white sofa on Bar Basque’s terrace, sipping a vodka soda and watching the men walk by. “I’m really independent,” she said, “and I don’t want someone who needs to be around me all the time. I want them to work 150 hours a week at Goldman Sachs.”

As darkness fell, the music got louder, and most of the younger-looking bankers filtered out. Left standing were most of the women and a slightly older male crew, whose actions and mannerisms gave off a distinct Old Wall Street glow. Aside from the Rihanna blaring from the speakers, the scene could have been Salomon Brothers, 1987.

I should have been satisfied. After all, I’d come to see the less savory elements of young Wall Street, and I’d seen them in concentrated, potent form. I now knew that in certain corners of the financial sector, the pre-crash culture of self-regard and vacuity was still alive and well.

But as I descended in the elevator well after midnight, I couldn’t help but worry. After all, the banker stereotypes who had come to Fashion Meets Finance were as much a part of Wall Street as the thoughtful, reasonable analysts I’d met in my travels. Like every industry, finance contains multitudes, and it’s not bizarre to think that an industry whose teleological goal is the pursuit of money will attract more unsavory characters than, say, a charity for orphans. But what if Wall Street doesn’t just attract preexisting douchebags, but actively draws normal people into an inescapable vortex of douchebaggery? What if the well-adjusted analysts I was interviewing already had the seeds of Old Wall Street culture inside them and were just months or years away from turning into the kind of craven and shallow people I’d met that night?

As much as I didn’t want that to be the case, I had to admit it was a possibility. After all, Wall Street has a long history of exerting a powerful cultural influence on malleable young analysts, who are often taught to succeed by emulating the people above them on the food chain. The fact that any bankers showed up at Fashion Meets Finance at all meant that the financial crisis hadn’t flushed all the obnoxiousness out of Wall Street’s system. And maybe, if the markets kept recovering, the financial industry’s moral awakening would be just a passing moment, a soon-forgotten footnote before the old guard returned.

RICARDO HERNANDEZ ARRIVED
at the basketball court looking like he’d been on the bad end of a bar brawl. His eyes were swollen and bloodshot. His normal gait had been replaced by a dejected half shuffle. And his shoulders slumped over like an octogenarian’s.

“Guys, I gotta go easy today,” he told his rec-league team. “I’ll die if I run too much.”

Ricardo had been going through hell at work. The M&A division at J.P. Morgan was notorious for being hard on first-year analysts, but the division’s reputation had failed to capture the full extent of the pain. The director of Ricardo’s group, a hypermasculine senior banker named Phil, worked his underlings like dogs in an attempt to give them the same kind of hard-knocks education he’d gotten as a young analyst. He never left work early, and he scoffed at any requests for days off. Once, when a vice president in the group had asked to be allowed to leave the office to attend his daughter’s first dance recital, Phil gruffly told him no.

“We’re mid-fire-drill here,” Phil said. Then, by way of cheering him up, he added: “Don’t worry—I haven’t been to any of my kid’s baseball games.”

In the spring of 2011, the M&A market was conspiring to create the most taxing work climate possible for young Wall Street analysts. The number of huge companies doing big, billion-dollar deals fell in the wake of the financial crisis and hadn’t yet recovered. Banks, which needed to keep their fees flowing, looked further down the totem pole to small- and medium-sized companies, and decided to pitch enough of those deals to make up for the shortfall at the top. What that meant, in practice, was that M&A analysts like Ricardo were overloaded with deal work, and almost none of it would result in the kinds of ego-fulfilling accomplishments that made it into the
Wall Street Journal
. In fact, because every bank on Wall Street was chasing the same deals, all rummaging for whatever M&A scraps they could pick up, most of the legwork done by people like Ricardo would never result in a finished deal at all.

Ricardo’s situation wasn’t uncommon. Every year on Wall Street, first-year analysts who were once courted by college recruiters with lines about how they would be given meaningful, creative work and the chance to learn from top executives are shown the harsh truth: they are Excel grunts whose work is often meaningless not just in the cosmic sense, but in the sense of being seen by nobody and utilized for no productive purpose. Some of the hundred-page pitch books analysts spend their late-night hours fact-checking in painstaking detail are simply thrown away after being given a quick skim by a client. In other cases, the client doesn’t read the deliverables at all, and the analysts’ work is literally garbage.

To help themselves concentrate and work longer hours, some of the analysts in Ricardo’s group had procured alertness pills like Adderall and Modafinil. Ricardo had never taken the pills, but he’d often been tempted to. He’d known he was signing up for long hours at the bank, but he’d never imagined anything like this. Most days that winter, he had worked the “banker nine-to-five”—getting to work at 9:00 a.m. and staying until 5:00 a.m. the next morning, at which point he’d trudge back to his Murray Hill apartment, sleep for three or four hours, and do it all over again. Even the money he was making wasn’t cheering him up. Ricardo had once made the mistake of calculating what his hourly wage would be, given his salary and a conservative estimate of his year-end bonus. The result—which he estimated was something like $16 an hour, after taxes—was much more than minimum wage, but not nearly enough for Ricardo to be able to justify the punishment he’d been taking.

Ricardo’s main task that spring had been making Excel model after Excel model. There were several kinds of models that banks used to value companies they were recommending as merger or acquisition candidates for their clients—including “discounted cash flows,” or DCF, a type of widely used model that used a company’s projected cash flows to estimate what it was worth on the open market. I’d learned how to make these models in my Training the Street seminar. It’s a fragile, delicate process that involves inputting long strings of numbers, linking cells to other cells, and cross-referencing each output so that when one input is updated, the rest of the model updates automatically. If one cell in a model refers to the wrong cell, or contains an extraneous dollar sign or a missing set of parentheses, it can break the entire chain and require hours to fix. Making one model is annoying; doing it twice a day involves getting accustomed to a constant low-level terror that is akin to working at a Christmas light factory, and knowing that one badly installed bulb in a string of ten thousand lights will make all the other ones go dark.

Ricardo’s stress wasn’t only a function of the fragility of his models. It was also related to his boss Phil’s splenetic temper. A few weeks ago, Phil had asked Ricardo to “spread comps,” a type of spreadsheet that showed a company’s valuation relative to other comparable firms in the same industry. The next day, while looking over the finished comps, Phil barraged him with questions: “How did you calculate EBITDA? Did you adjust for stock-based compensation? Are these consensus estimates?”

Ricardo was a little unsure about his numbers, many of which he’d arrived at during an all-nighter. When he hesitated too long in answering, Phil lit into him.

“You’ve got to know this!” he yelled. “You have to know everything stone fucking cold!”

Ricardo’s treatment was relatively mild compared to what Mary, an associate in his group, had gone through. Mary, a woman in her late twenties with an MBA from Wharton and a piranha’s temperament, typically sat through Phil’s rants with a poker face. But late one night, when he had railed on her over the phone about the progress of an unfinished project, she broke down crying. Ricardo, who was the only other person left in the office, had the unpleasant task of consoling her.

“I’m naturally an optimistic, positive, happy person,” he told me later. “But I feel myself becoming a lot more bitter, a lot more negative.”

Ricardo’s schedule had also taken a toll on his girlfriend, who lived on the Upper East Side and worked as a TV production assistant. These days, she barely saw him. He cancelled several Saturday night dinner reservations at the last minute due to deals going haywire, and their relationship was becoming increasingly strained.

In the course of my finance-industry immersion, I often found myself asking older bankers about the necessity of the first-year lifestyle. In an era when technology has made working from home much more feasible, why are bankers—whose work comes in fits and spurts—required to be physically present at their desks for upwards of twelve hours a day? Couldn’t you hire twice as many recent college grads, pay them half as much, and create a more reasonable sixty-hour week for everyone?

The answers I got came in several flavors, most of which boiled down to “Because it’s always been like this.” With the same attitude as a fraternity brother who treats the pledges like dirt because he remembers being abused as a pledge, many older managers on Wall Street seem to cherish putting analysts through their paces. And although some bank executives recognize that burnout and exhaustion are common among young analysts, they don’t necessarily seem to view it as a treatable issue.

“Is there a way to make this easier on analysts?” one senior Wall Street hiring director asked me, then answered his own question: “Yeah, probably. A lot of it you can’t control. But we try to get managers to think about, how do you distribute work evenly to analysts, and do it and sooner in the day? That seems to make a difference.”

Some people insist that the masochistic lifestyle adopted by young Wall Street workers was related to the actual needs of their firms (chiefly, the need to demonstrate to clients that they have an army of well-trained junior analysts who can churn out a pitch book at 3:00 a.m. under extreme duress). And others explain it as a self-selection mechanism. When given such unreasonable hours, the logic goes, analysts either bow out under pressure or rise to the challenge. How else are you supposed to find out who is real Wall Street material?

The most reasonable-sounding answers I got to my questions were from people who told me that the hundred-plus-hour weeks of a first-year analyst were one half of a grand, unspoken social contract that had existed on Wall Street for decades. As part of the basic bargain, analysts were asked to demonstrate full loyalty to the firm by becoming a slave to its demands. In order to fully belong, the first-year analyst had to realign his priorities, replacing his own with his bank’s. And seen in this light, all the young banker’s cancelled dinners and broken relationships aren’t just unpleasant externalities—they were central to the process.

Ricardo understood why he had to work hard, and most of the time he didn’t mind. He accepted that he had given his life over to J.P. Morgan for two years, and he knew that in exchange he would one day get a shot at a promotion and a raise. But now, he questioned whether even that was true.

In the past few months, Ricardo had begun getting calls from headhunters, who came bearing interview opportunities for jobs at private equity firms and hedge funds, where the workload would be slightly better. He didn’t think much of them at first. After all, every first-year got these calls, and most of them were for second-tier shops that would represent a step down, prestige-wise, from his current job. But recently, he’d begun to think seriously about whether any of those jobs might be a better fit.

After all, didn’t he like having a life outside of work? And could he make it through one more year in the M&A group, with Phil’s temper and a bullpen full of analysts hopped up on pills?

Maybe, Ricardo thought, it was time to start scanning for the exits.

BOOK: Young Money: Inside the Hidden World of Wall Street's Post-Crash Recruits
7.16Mb size Format: txt, pdf, ePub
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