The new reality is starting to slowly sink in. And it is not pretty. The celebrity financier has become the new celebrity villain. The switch is playing out on the blogosphere, where people have defaced pictures of Mr. Thain — adding horns and devilish tail — the way Perez Hilton’s celebrity Web site would mock Britney Spears’s body fat.
(By the way, doesn’t it seem increasingly hard to vilify Richard S. Fuld Jr., the former chief executive of Lehman Brothers, given what’s happened since that firm filed for bankruptcy? If you haven’t read it yet, there’s a remarkable court filing by Harvey R. Miller, the respected lawyer at Weil, Gotshal & Manges overseeing the bankruptcy, that practically exonerates Mr. Fuld. See nytimes.com/dealbook)
Even the Masters of the Universe say the change is palpable.
Not long ago, before the buyout boom went bust, David M. Rubenstein, a co-founder of the private equity firm Carlyle Group, regaled people with forecasts of a $100 billion deal. Now, he spends less time on the road talking to prospective investors, and more time with his current investors, worrying about their investments.
“At the height of the buyout market, anyone could raise money and everyone did,” Mr. Rubenstein said. “Now it’s hand-to-hand combat for every dollar.”
And in an industry where the goal and scorecard is money, Wall Street’s top brass are making a fraction of what they did a few years ago. And their personal fortunes have sagged along with those of their companies.
At the beginning of 2008, Vikram S. Pandit, the head of Citigroup , owned shares in his company that were worth $31 million, according to Equilar. Today, his stake is worth $3.7 million.
Mr. Thain’s stake in Merrill was worth $28.5 million a year ago; now it is worth $6.5 million. Lloyd C. Blankfein, the chief executive of Goldman Sachs , owned $465 million of shares in the firm at the beginning of 2008; today his investment is worth $167 million. Kenneth D. Lewis, the embattled chief executive of Bank of America , owned $121 million stake in his bank a year ago; today it’s worth $18.5 million.
Those numbers are still big. But the next generation of Wall Streeters, assuming there is a next generation, seem to be scaling back their expectations.
“Two years ago, I’d have students come to me and complain about their $1 million offer,” said Nabil N. El-Hage, a professor of management practice at Harvard Business School who teaches a popular course about private equity. “Today there is a clear realization that they won’t make the kinds of absurd money at 30 years old or 35 or even 40 that used to be possible.”
People in search of power often gravitate to money. But maybe that’s changing a little. For instance, Steven Rattner, a financier and consigliere to many of New York’s media moguls, is near an appointment by President Obama to become the “car czar,” a job that is unlikely to pay much and will probably involve lots of time in the much less glamorous or powerful Detroit. But at a time when the markets are in turmoil and the future is less clear, it may be a more attractive option than staying put.
“The huge amount of uncertainty about the investment banking business and finance is making people rethink where they want to be,” Frank Yeary, the longtime head of mergers and acquisitions at Citigroup who departed in the summer to become a professor at the University of California, Berkeley. “Now is a great time to start something new. The opportunity cost is low,” Mr. Yeary said.
Similarly, Gregory J. Fleming, the former president of Merrill Lynch, left the firm in January to take a teaching post at Yale.
Maybe all of this is a good thing. We might all be better off if more smart people put their talents to work in government or academia, rather than financial engineering. Mr. Wolfe said he always felt that all the talent that went to Wall Street “frankly, always seemed like a terrible waste, but the money was irresistible.”