The New York Times today declared that the recession in New York City will be much milder than expected. It puts the close escape, or at least the perceived flat line, down to the fact that Wall Street has managed to keep it's head above water and bankers are once again earning, employing and spending. It puts forward the 'widely accepted' idea that each job in Wall Street supports two others in and around the city. With my fortunes being so entwined with the success or failure of the banks' bailout, this should make me feel at ease. But instead, I felt a sense of unease. Maybe when Obama injected these banks with all those billions of dollars he was just like Kiefer Sutherland's character in Flatliners, keeping us all hooked on dicing with near death (or economic collapse) experiences. Are the bankers comparable to the indulgent and reckless medical students Nelson, Rachel and David?
Without doubt there are some thrill seekers out there, but I don't subscribe to the view that every banker is a mercenary ambulance chaser. Warren Buffet advice to his shareholders over the weekend was - 'Don't ask the barber for a haircut', which was a way of implying that all bankers will tell clients to do deals (which earn them high fees) even if it is not in the clients' best interest to do so. Ambulance chasers. Well, yes, if you are young, naive, fly by the seat of your pants Michael Douglas in 'Wall Street' one dimensional character, you will do that. But, real life bankers have to sit eyeball to eyeball across a table from their clients, time after time. They have to work very hard to earn their trust, build the relationship and offer advice when there are no prospects of any fees in sight. If they told their client to do something which was not, in all honesty, in the company's best interest, that relationship would be dead in the water. All that flying around, hard work and trust building would be gone. What the good bankers do is take is long term view, they doggedly follow the success and failures of their clients. Shadowing their balance sheet movements like it is their first born child.
It is also a disservice to industry leaders, implying that they will be duped by these gung-ho advisers. My experience was that usually these leaders will have already made up their minds as to whether or not they want to do something. They will have crafted their views with their advisers (sometimes on a casual basis), boards and in house corporate development people. They come to banks to do deals, to use their sales force and get a good price. In the bank I worked for we did it the 'old fashioned way'. Clients held us on retainers for our advice which meant that we gave it regardless of whether it brought in a one off big deal fee. There were times when clients wanted us the tell them to IPO for a gazzillion dollars and we didn't. We told them it was too early and the valuations they had crafted in-house were unrealistic. We missed the big fee, they went with our competitors who told them what they wanted to hear and, guess what, the IPO bombed. The senior banker I worked for had taken the long term view. There are lots of bankers out there who got to train under people like that.
But, so what if bankers have more moral fiber than Mr.Buffet wants to give them credit for? At the end of the day, New York City and Wall Street seems to have had an easier time than the rest of America and the world as a result of this recession and that still makes me feel uneasy. Eighteen months ago my family had braced itself for a life changing downturn, as it turned out we managed to have some luck and end up happy in Manhattan. I recognise that I am sitting here writing my fluffy blog, when others have not been so lucky. But, what do I actually do about it? There are some big things that I am working on but in the meantime I am not taking any day of this flat line for granted. I just hope that if I crash again, as much as I love Kiefer, it will be Kevin Bacon who brings me round.
yours dreaming of Kevin and a CPR machine