 "I miss the past. I miss waking up in the morning and thinking about
making enough money to buy another house, car, painting, exotic vacation
and feeling like I am the master of the universe. I miss my world where anything is possible as long as I laser focus all
my intellectual energy on making money for me and my firm. I miss the
personal challenge of making last year's compensation look like a small
blip on the screen. Yet I have hope that we will be able to fix the system so I can resume
my efforts to manufacture money." These are the thoughts and desires of many who benefited from the creation of products and services that in reality had little actual value. Those who used pure self interest as their guide, the mantra that insists that “profit at any cost” and “what is in it for me” are the only considerations worth thinking about. The longer we as a society desire to resurrect a model that brought the global economy to its knees, one that has created pain and suffering for millions and millions of people throughout the world, the longer we will remain in a state of chaos. We are faced with the opportunity of a lifetime. Before we can capitalize on it we must move from denial to acceptance by letting go of our flawed profit models and embracing new possibilities.
Our old system was destined to implode. Profits were derived from phantom products that offered little genuine value to consumers. The unrestrained self-interest of a relatively small group of individuals destroyed the foundation of trust millions of others relied upon. And so we must create a new business model; one that does not favor only one group of people over another; one that has at its core a solid foundation of products and services that have real value and help people live better lives. The first step in creating that system is to understand on a gut level that business is one of the greatest connectors of people that ever existed. The current economic crisis reveals how deeply business touches each of our lives in profound ways. Business supplies our livelihoods, comfort and security. This profound sense of purpose creates essentially a sacred covenant between our business community, our workforce and the consuming population. Its importance to the daily fabric of our lives necessitates a grave responsibility from those who create business to those who depend on it. While there are clearly many damaging effects of bad business practices, there are many more beneficial life-enhancing aspects to good business practices. It is where we meet to co-create value for others and at the same time reap the benefits of a livelihood for ourselves. Only when the individuals who run our financial and governmental institutions acknowledge this connection will things substantially improve. This crisis has made us realize that profiting at the expense of others is no longer socially acceptable. A good business man or woman can no longer benefit with impunity by tricking the masses into valueless products. Good Business will become what in reality it always was - human beings creating products or services that enhance the lives of others. Perhaps the same level of drive and creativity that was used to defraud ordinary citizens will be applied to developing businesses that produce a positive impact on society as a whole. That way we can all be the beneficiaries of the smartest and brightest among us and bear the real fruits of a system of capitalism that has in its scope a better world for everyone. PETER RESSLER is Chief Executive Officer of the Ressler Mitchell Group in New York catering to Wall Street's Elite. Peter's legendary reputation as the "best in the business" in financial recruiting combined with international renown as a leader in values-based and socially responsible business makes him one of the most unique voices on the Street. He is also a volunteer firefighter and a member of the Firefighter Assist Search Team in his local community. As a business ethics expert and Wall Street veteran, he has been called, "The Sage of Wall Street." RETURN TO TOP * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Calling All Heroes “Ask not what your country can do for you. Ask what you can do for your country.”
- John F. Kennedy Things are really tough on Wall Street. For most of us, we no longer even know if there is a Wall Street. The world we knew for the last few decades has come painfully and abruptly to a halt. I could mark that day to six months ago, September 15, 2008, the day Lehman Brothers fell. That day will forever be remembered in infamy. That was the moment Wall Street, as we once knew it, ceased to exist.
We could go back over and over past mistakes, but it wouldn’t do much good to resolve the suffering of the moment. As the country suffers, so goes the world.
There are a lot of bad guys on Wall Street. Most of us in the industry know this. Wall Street has been villianized again – just as it had in the 1930s and many other times in history. Selfish, greedy, gluttonous, money hungry white collar bank robbers prowled the Main Streets of America poised to take whatever was not nailed down.
It’s enough to make a Wall Street veteran sick. Many of us are. Many of us worked seven days a week, fourteen hours a day for years, only to find the culmination of our life’s work destroyed by the reckless indifference of colleagues. Okay, I feel for you. I am feeling it too.
Yet another thing I know from 28 years interviewing and working with and for some of the top market makers in the industry, is that there are a lot of good guys on Wall Street too. (Excuse me gals if I use guys as a generic term for everyone.) I know a lot of really honorable, smart people who built their careers on integrity, talent and tenacity, yet now suffer from the missteps of others.
In my nearly three decades in finance I have discovered there are two Wall Streets: the one of infamy that feeds off injury to others and another that creates wealth and markets that improves the lives of millions. The latter is the Wall Street I know best, the Street I have chosen to work with for most of my career.
To these Friends I say:
The world is suffering with us. Some are getting hit really hard. Observing the growing lines at the food bank near my office, the tens of thousands of layoffs announced weekly in almost every industry, the unbelievable pace of foreclosures throughout the nation, it looks like things are worsening by the day.
Our country needs us. There is a lot of money sitting on the sidelines in private equity, hedge funds, and private investor capital. Everyone is waiting for the opportunity to turn this crisis into a boom.
I have a new proposal on how to beat the Bear for all those sitting on piles of cash on the sidelines. It is time for the brave and hardy to jump into the ring. Put your Patriot Suits on and lend a hand to our confused and dysfunctional government. If we wait for Congress, the Federal Reserve or even the Treasury to save us, all the progress we and our parents made before us may disappear.
Calling All Wall Street Heroes…
Take a page from our Bravest, those who saved us from near destruction seven and one half years ago by jumping into the towering fire that took thousands of our own down. Now it’s our turn. We have the tools to put this inferno out. Invest cold hard cash directly into some of the better companies in our nation before they put more unemployed on the streets and create more homeless mouths to feed. Together with our government we can knock this raging fire down to simmering embers.
People don’t want a handout, they want a job. They don’t want to stand in a bread line, they want to buy their own.
So here is the plan:
Right now the consumer and the small, medium and large businesses that employ them
are taking the hit dead on. Every hit they take weakens the basic foundation of our economy.
Trusting the ones that brought this on to do the right thing after two strike outs is a fool’s gamble where the risks are greater than we can imagine. Buying bad assets from bad banks is a bridge to nowhere. Bad banks will not support good businesses now anymore than they did since they received $350bn to do so.
If ordinary Americans don’t have a job, they cannot pay their bills. If they don’t pay their bills they
will default, thus creating even more pain and suffering for all concerned. How many of the 7,000 workers laid off from Macy's can grab the shovel and start building roads as earmarked in the new “stimulus” package? How many of them will benefit from a tax credit if they are no longer employed?
The operating theory is that private capital will save the banks by buying the bad securities nobody really wants. If private capital buys distressed assets from banks with the same guarantees offered to Freddie and Fannie how can we be sure the banks will use the funds they receive to shore up the middle of the structure of our economy? So far their actions say they can’t or won’t.
It is time to give up the old model and realize we are in uncharted territory. Any attempt to get back to the old model that has been pulverized is a waste of time and certainly a waste of our money which is being printed faster than we can keep track of. The debts we are incurring now will have to be repaid by our children, their children and their children’s children.
There is another way.
All of those who have become fabulously rich as a result of being in the right place at the right time must put on their patriotic uniforms and help those who did not happen to fall into the same great fortune and luck. After all, without the middle classes many of those fortunes would never have been made.
To prevent our economic system from declining further, we need to shore up the foundation where the circulation of funds begins and ends. By investing in large, medium, and small businesses that employ the backbone of this great country - the consumer - we can stabilize our economy. Private equity can step into the American creditors’ shoes and issue low cost long term debt to struggling business with the strings the government won’t attach – keep your people employed. Firms will show their love for our country by taking on debt in order to avoid more layoffs.
This action by the financial community would reveal to the world the other Wall Street - the one that cares about safeguarding our nation’s economic health and who understands America’s responsibility to the world. We need to save our own country and not wait for others to do what we can do ourselves.
J.P. Morgan, the man not the firm, did this successfully in the early 20th century during the Panic of 1907. He jumped in to save our nation and in the process saved himself. Warren Buffett stepped in to shore up some unstable companies in the fall of 2008. There are many more big investors out there like Buffet and the late Morgan. This country has been good to you; it’s time to show your country how good you can be to it.
If we don’t step into the fire and help put it out, there is much more pain to come. Put on your bunker gear and Scott Packs and let’s put this fire out before it burns the whole house down.
PETER RESSLER is Chief Executive Officer of the Ressler Mitchell Group in New York catering to Wall Street's Elite. Peter's legendary reputation as the "best in the business" in financial recruiting combined with international renown as a leader in values-based and socially responsible business makes him one of the most unique voices on the Street. He is also a volunteer firefighter and a member of the Firefighter Assist Search Team in his local community. As a business ethics expert and Wall Street veteran, he has been called, "The Sage of Wall Street." RETURN TO TOP * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The ABC's of Money
One of the principle purposes of the economy is to circulate money. Financial institutions provide credit to businesses to produce products and services that are sold to consumers, thereby perpetuating the flow of money. If people are not employed and can not put money back into the system, stalled consumer spending is equally perilous to a healthy economy as is the freezing of credit by banks.
Seems to me the most important economic issue for the country right now is keeping people employed. Let’s attach a letter code to these players as follows: A: Banks: investment banks, investors and financial institutions. B. Businesses: small, medium, large, the support system for the work force. C.: The Workforce: every one from hourly workers to management. i.e. consumers- the support system for the economy. Imagine what life would be like if the B’s and C’s were eliminated. The entire economic structure would cease to exist. So it is safe to say that the B’s & C’s are a key factor in the smooth running of our economic system. Over the past 10 years the A’s have provided enormous amounts of debt to the B’s & C’s without giving much thought to how that debt would get repaid. That is because the more debt the A’s issued the more money they made for themselves. Many of the constraints that were placed on the A’s for issuing credit have been removed over the past 10 years thereby encouraging them to just keep lending money to anyone who would take it. In the process the A’s became extraordinarily wealthy. As the A’s grew exponentially wealthier, the burden of debt shouldered by the B’s & C’s also grew to unprecedented levels. The B’s & especially the C’s have reached a breaking point where perhaps in their entire lifetimes they would not be able to repay it all. The A’s realized they could get even richer if they used leverage, which means for every dollar they used they would borrow money from other banks to inflate their profits. The assumption was the markets, especially the housing market, would continue to rise indefinitely. This left everyone carrying unrealistic amounts of debt poised to come crashing down if the markets stopped moving up. In mid 2007 the first wave of defaults in the subprime mortgage markets began. As the loans taken out by the A’s started to get called in they began to experience huge losses. This put additional pressure on the B’s because the A’s stopped making loans and the credit market froze up. The circulation of money from A to B & C stopped, leaving money only flowing in one direction, from B & C to A. The economy cannot sustain this. Fear and panic has set in for the A’s. The huge amounts of profit they were accustomed to came to an abrupt halt. They turned to the Federal Government for help. The government provided billions of dollars of B & C’s money to A so they could lend it back to B & C. The idea was to get the circulation of money going again much like a defibrillator gets the heart pumping after a heart attack. Only the A’s had so many bad debts on their books that instead of circulating the money they kept what they got and asked for more. The weight of the A’s debt is crippling the B’s & C’s. Without available credit to businesses that keep consumers employed, the money supply is drying up. A’s are pooling all the available cash without understanding that this will guarantee another system collapse. The B’s can no longer fund their businesses and keep workers employed as the A’s will not distribute any of B & C funds. B’s will default on their debt and close up shop leading to more defaults on their business loans. B’s will have lay off C’s as there is no money to pay them. C’s will have no money to circulate back to pay mortgages, credit card debt, auto loans or student loans. If money ceases to circulate in our economy, the downward spiral is vicious and brutal. The trillions of dollars sitting on top of the roof will eventually bring the whole house down. The foundation of B’s and C’s it is built upon will not be able to sustain the weight above it. Every time a brick is removed from the foundation (i.e. layoffs) we get closer to collapse. A building built on a weak foundation cannot remain standing very long. Unless we find a way to shore up the foundation the entire system is destined to fail. When the foundation collapses it will bring down the roof and the upper floors. When the debris settles and the smoke and dust clears what will we find in the rubble of the once great structure? The A,B,C’s of money demands we shore up the foundation of our economy as much or more than we need to patch up the roof. If people are not working, they will not have money to circulate, let alone survive. What good is a leak proof roof when the structure itself is reduced to rubble? PETER RESSLER is Chief Executive Officer of the Ressler Mitchell Group in New York catering to Wall Street's Elite. Peter's legendary reputation as the "best in the business" in financial recruiting combined with international renown as a leader in values-based and socially responsible business makes him one of the most unique voices on the Street. He is also a volunteer firefighter and a member of the Firefighter Assist Search Team in his local community. As a business ethics expert and Wall Street veteran, he has been called, "The Sage of Wall Street." RETURN TO TOP
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * It’s Only Money
As I sat doubled-over in pain, tubes coming out of my arm, doctors hovering over me in the emergency room with looks of concern on their faces, fear shot through me. I thought, “This can’t be happening.” Yet this surreal event was as real as anything I ever experienced. I had just spent the last few weeks of my twenty-eight-year Wall Street career as a financial recruiter interviewing the bankrupted fixed income desk at Lehman Brothers. In all my years with the top athletes on Wall Street (with the possible exception of September 11, 2001), I had never seen so many grown men crying. I felt like crying myself.
Dead men walking. That is how one of the top managers described the tremendous loss these shattered financial stars were feeling. “It’s like an economic 9/11,” he told me referring to the collapse of the investment banking giant, Lehman Brothers. I stood to make lots of money on their demise placing displaced bankers with my hedge fund clients. Yet I would have wished for it never to have occurred. I could not shake the sadness I felt, the overwhelming sense that something great had just ended—the era of American financial supremacy and the Wall Street I had known for almost three decades.
Three weeks later I found myself wheeled off a plane from an international business trip barely able to breathe and asking myself, “Is this IT?” Doctors found me in superior health. “A heart like a 19 year old,” my cardiologist quipped. Stress was the final diagnosis. I suddenly realized how unbelievable it was to witness the world’s most powerful financial institutions crumble and vanish in a matter of weeks.
I had lived through 9/11 as a New York businessman losing dear friends, dozens of colleagues, and millions of dollars in revenue. I had experienced the unspeakable horror of death and destruction personally as did many of my associates. Lehman Brothers stood across from the giant gaping hole that was once home to the Twin Towers. I knew many of the Lehman employees had witnessed victims jumping eighty stories to their deaths.
I kept reminding myself that no one had died in this historic moment. “It’s just money,” I thought. Yet I knew it was much more than money. The entire global economic system and the stability and comfort of American life were at stake. It begged the question, if you lose your entire life savings in a single moment, what do you have left?
I have thought of this question often in the past several months. It first surfaced when the former mortgage securities powerhouse Bear Stearns was sold for a song over a weekend. Long term employees lost every cent they had worked for in a single moment. When the share price of $2 was raised to $10, employees and investors felt at least they got something. My office was filled with top Bear producers shell-shocked by the events that brought their seemingly solid world crashing down.
I attended a Benefit a few weeks later for a children’s foundation funded by Lehman and Bear stars. The uneasiness was palpable. A Lehman derivatives salesperson whispered, “It is so terrible about Bear.” We both looked in the direction of a group of young men huddled around the bar. She knew as did I that Lehman was whispered to be “next.” We blocked that thought out immediately; in our view that was impossible. Unthinkable. When the impossible and unthinkable occurred a few short months later, the stunned response was heard around the world.
After Bear’s fall and dozens of meetings with devastated colleagues, I had thought, “I never want to go through that again.” When I found myself interviewing the bankrupted Lehman employees it was overwhelming. One by one their stories unfolded. I can’t remember how many said, “I have lost everything.” Somewhere along the line I lost count.
So again it begs the question: what do you have left if all your amassed wealth disappears in a single moment?
No matter how much material prosperity we lose no one can take away our respect, integrity and honesty. People always remember someone who did the right thing for them. People will always go out of their way to help someone who never tried to hurt or deceive them. The essence of who we are does not lie in the amount of money or material things we accumulate. It lies in the way we treat others as we amass our fortunes and climb up the ladder of success.
If we take our bank account, stock and bond portfolio, houses, cars, private schools, Ivy League Universities, designer suits and country club memberships and put them on the shelf; who are we? What are we? We are simply human beings striving for happiness and success just like everyone else. We seek the love and respect of our family and friends and colleagues. No matter how devastating market conditions become these things can never be taken from us. These are what I call permanent assets. With these assets firmly in place we can always make the money back again. PETER RESSLER is Chief Executive Officer of the Ressler Mitchell Group in New York catering to Wall Street's Elite. Peter's legendary reputation as the "best in the business" in financial recruiting combined with international renown as a leader in values-based and socially responsible business makes him one of the most unique voices on the Street. He is also a volunteer firefighter and a member of the Firefighter Assist Search Team in his local community. As a business ethics expert and Wall Street veteran, he has been called, "The Sage of Wall Street." RETURN TO TOP **********************************************************
From the Trenches: Business is Personal “Forgive them Father; they know not what they do. “ Where have I heard those words recently? Not the Big Book—I haven’t read that for longer than I can remember. Church? I haven't been there for even longer –with one exception—September 11, 2008. I found myself in morning mass at St. Frances of Assisi on West 31 Street surrounded by several hundred uniformed firefighters from midtown Manhattan’s Battalion 7. The words of my good friend, Father Chris Keenan, Chaplain of the New York City Fire Department, rang across my ears. “Christ asked God to forgive what he could not.” These were his words of comfort for the heartbroken men after seven long years of suffering.
Three days later I watched alongside my stunned Wall Street brethren as the shock heard around the world hit the news alerts. The unthinkable collapse of a venerable investment banking institution the size and scope of Lehman left anyone watching breathless. Every one (except for short sellers and those who view Wall Street as the enemy) mourned the loss of Lehman. On the Street in the last few weeks, it feels a lot like a state funeral as we buried one of our own. I remember stories from September 11, 2001. Lehman employees, whose building stood directly across from the Towers, watched helplessly as colleagues jumped to their deaths. Seven years and four days later, the Lehman that survived that world-changing event was gone.
While Dick Fuld filed for bankruptcy for the firm that sustained him for forty years, outrage and frustration filled the streets and airwaves. Word had it that Fuld turned down a $26/share offer for Lehman just one month before. Even worse, Street sources claimed Fuld had offers for Lehman at both $8 and $12/share as late as a week before bankruptcy. Bankers, brokers, and traders relayed tales of shouting matches between top managers and Fuld. All the while, those of us watching wondered why Dick Fuld would orchestrate a bankruptcy when he could have sold the firm weeks if not days before. The UK Guardian attributed his actions to “hubris.” Nocero of the New York Times called it “denial.” A frustrated trader in commercial real estate who lost his entire net worth in Lehman stock said, “They took down 25 million plus year after year, piling on risk after risk, greed after greed, and never thought of their people.” As Fuld brought the employer of nearly 26,000 to its knees, a senior banker who sat in on the negotiations exclaimed, “The humanity of what’s happening here is lost on these people.”
The words of Father Chris’s sermon echoed. Forgive him Father; he knows not what he does. I have to believe that the humanity (or inhumanity) of this event was lost on Fuld. My reverie is interrupted by an email from a Berlin colleague. “It's a great shock to see what is happening to seemingly untouchable financial companies like Lehman Brothers.” Another colleague said of other investment bankers in the line of fire, “They’re scared s---less, as they thought they were impenetrable.” Untouchable, impenetrable—these words hit me hard. We all thought Wall Street’s elite firms were impenetrable. Dick Fuld must have thought so too, right down to the very end.
The events of the past several months since Bear Sterns’ collapse have shown us that Wall Street is as vulnerable as Main Street to recklessness, mismanagement, and human unpredictability. It took us all by surprise. Maybe that’s the lesson. None of us are really untouchable.
As CEO of a Wall Street recruiting firm that serves investment banks and global hedge funds, I am privy to the human impact of these events. The recent words of a former Lehman superstar came back to me. “They sucker punched me. I got knocked down, but it’s not over yet. I will get back up.”
Father Chris closed September 11 mass with Christ’s words on the cross that still resonated with the pained heroes present. “Why have you forsaken me?” He explained it is only human to feel frustration and rage against man or God, in times of deep loss and crisis. The key, he said, “is to remember we are never forsaken.” Those who were lost seven years ago in the terrible moments of that tragic day live on in us. Father Chris called all of us who remain, “their living legacy.”
I think of all of this now as I field calls from the panicked, the worried, and the outraged. Seven years ago so much life was lost. We are their living legacy. For their sake and our own we will rebuild. We counted bodies then; we are only counting numbers now. I offer words of comfort that might shock some of my colleagues…it’s only money. There are no body counts this time around. We still have our minds, wits, families, and friends. Okay—we were sucker punched. But it’s not over yet. We will get back up. RETURN TO TOP **********************************************************
The Credit Crisis: Business is Personal August 2008 EVERYTHING WE DO IN BUSINESS IS PERSONAL. In my 27 years working in financial recruiting on Wall Street I realize that my career was built through the relationships and trust I established with other people.
The late Michael Mortara is a perfect example of how business is personal. Mike was a partner at Goldman Sachs in charge of Global Fixed Income. He was also one of the founders and creators of the Mortgage Backed Securities (MBS) market. I worked with Mike for over a decade as CEO of the sole retained search firm for the Fixed Income Division at Goldman.
When we first began working together, Mike wanted to know all about my background, where and how I grew up, my interests and passions. He was as interested in who I was as a person as my ability to perform my job with excellence. In many ways, his understanding of the personal aspect of a business was the secret to his enormous success. Colleagues and associates loved Mike personally and professionally. Many of the Goldman partners he introduced me to twenty years ago are still my clients today. Our relationships are based on trust - the glue that holds all successful business relationships together.
In November 2000, Mike died suddenly of a brain aneurism. At his funeral, senators, heads of investment banks, hundreds of Wall Street colleagues, long time Goldman partners and approximately half the janitorial staff of Goldman Sachs were in attendance. From janitors to senators, people memorialized Mike with stories of the impact he made in their lives. It seemed he helped thousands of people in his brief life. Tents were set up outside the church to accommodate the large crowds gathered to pay tribute to a man who understood that everyone we come in contact with, regardless of their station in life is a human being first and should be treated with dignity and respect.
Forgetting the personal aspect of business can be career suicide. The current credit crisis is a great example. Homeowners, speculators, bankers, investment bankers, traders and investors all contributed to the meltdown of the subprime mortgage market. Record numbers of foreclosed homes, tens of thousands of jobs lost, and careers ruined. People’s lives have been forever changed. Mike as one of the founders of the MBS market never forgot there was a human being at the other end of the transaction. His view of business was that everyone could win, the investor, the banker, the homeowner, if you treated them right.
When we forget there is a human being on the other side of every transaction in business the results are disastrous. To avoid another catastrophe in the global markets like the current credit crisis each of us must remember individually and collectively that business is always personal. © Good Business International, Inc. 2008 RETURN TO TOP
|
