Another investment banker I know resigned recently and set off around the world with his family. I assumed this would be a frugal foray: crowded trains in India, budget airlines to European capitals, perhaps a campsite or two. After all, bonuses this year were meant to be meagre not munificent, with a hefty stock component. Imagine my surprise when I received a chatty email from the investment banker telling me he was relaxing for three weeks in a magnificent villa at the luxurious Amanpuri resort in Phuket. Three staff were attending to every whim of his four-person family. The last person I heard about staying at an Amanpuri villa was Noam Gottesman, co-founder of the successful GLG hedge fund. Noam was apparently there in Christmas 2008 before the world suffered a near-lethal coronary. It certainly appears as if Planet Finance is thriving once again notwithstanding public hostility, bonus taxes and politicians baying for blood.
However, all is not as it appears. There are fissures within the ranks. Some have had a good crisis and others have floundered. The crisis was like playing golf naked: nowhere to hide. Your bank was either well positioned and emerged stronger (JPMorgan, HSBC), had made wrong decisions and crumpled (Bear Stearns, Lehman, Merrill) or swooned but then limped back to life (Morgan Stanley, Citi).
This year, there were huge discrepancies in chief executive compensation. Some chiefs took a hair-shirt approach: Société Générales Frédéric Oudéa, Barclays John Varley, and Morgan Stanleys John Mack scaled their bonuses back to zero. Others, such as Brady Dougan of Credit Suisse and Jamie Dimon of JPMorgan, were "well looked after" as the phrase goes.
Investment banking is fiercely competitive. Part of me wonders what happens when Well-Paid Chief meets Poorly Paid Chief. Is there an extra swagger to Well-Paid Chiefs gait? Does Poorly Paid Chief feel he has the status of an ant? Sometimes however, hefty chief executive compensation is a hostage to fortune. A source confides that he met Prince Charles in 2009. The Prince murmured, on learning that my friend was a financier: "Oh yes, I knew the banks were in trouble when that fellow Blankfein took a $70 million bonus."
Bankers are well paid compared with the rest of us but in return for corpulent compensation there is an unwritten code of conduct. You must always insist you are putting your clients first and assisting them to solve problems. Note to prospective banking graduates: the correct answer to the interview question: "What do you like doing in your spare time?" is "Finding solutions which help others." The wrong answer is: "Lying in the sun smoking cannabis." Another unspoken rule for investment bankers is that there is no "I" in team. In other words bonding is obligatory and loners are losers.
Everyone is talking about a recent Vanity Fair article: "Lehmans desperate housewives". This is an extract from Vicky Wards book The devils casino: friendship, betrayal and the high stakes games played inside Lehman Brothers. The article focuses on a subject dear to my heart: the role of the corporate wife. Dick Fuld expected his senior executives to be happily married. Chris Pettit, once Dicks deputy, said at a dinner for senior colleagues: "Now look at this! Every single person here is with their original spouse. That is why we are successful. Because our word is our honour. We succeed in business because people can trust us." To be judgmental is to assume you are above others, to be hypocritical means you are vulnerable to others. When Pettit started an affair with a woman at the firm, his career cratered.
A Lehman spouse might as well have been a single mother. Karin Jack, married to Bradley Jack, a former Lehman senior executive, understood the unspoken rules: "As a Lehman wife, you raised your kids by yourself. You had your babies by yourself in the hospital. And then you were supposed to be happy and pretty and smiling when there was an event, and you... would have liked to strangle somebody." Lehman wives were encouraged to become friends but if your husband left the firm, your friendship was superfluous. The ironic kicker at the end of the article is a vignette where Kathy Fuld, after Lehman went bankrupt, sobs to Peter Cohen, chief executive of the Cowen Group, that she had been dropped by the wives of other Wall Street chief executives. "I thought all those people were my friends," she wept.
Abigail Hofman: Banking back to the bad old ways