New York Magazine describes what it’s like for Manhattan’s financial elite when the music suddenly stops.
The Trader had come to Lehman only a year ago, after being recruited from a rival firm. Heâ€™d studied physics as a grad student, then come to Wall Street as the tech bubble and the aggressive gentrification of the Giuliani years remade Manhattan into a bankerâ€™s playground, a place where a $2 million salary could seem like the norm.
Like many on Wall Street, the Traderâ€™s career was moving along briskly. By 2006, he had settled into a new $2 million house in Connecticut with a pool, and kept a pied-Ã -terre in Manhattan. With two young children, he had private-school tuition to cover. He had recently completed a home renovation, and now there was talk of a new porch with a built-in stainless-steel barbecue. The Trader estimated that he was two years from making enough money to retire and never have to work again.
By Saturday, September 13, Lehman Brothers teetered on the precipice of bankruptcy after Barclays and Bank of America walked away from a deal. The Trader was certain of little, except that he was a lot poorer. The unvested stock from his previous yearâ€™s bonus, once worth $3 million, was now reduced to a scant $6,000. And on Wall Street, self-worth and net worth can amount to the same thing. â€œThe hardest thing in my mind is to have your compensation cut,â€ a veteran Wall Street executive says. â€œItâ€™s almost like youâ€™re a bad person.â€
At a dinner party in Darien that evening, the conversation was a mix of denial and panic. An executive from UBS lamented what the Lehman meltdown would mean for Wall Street. â€œThis is going to be a disaster,â€ the executive said. The executiveâ€™s wife nervously tried to steer the topic toward lighter subjects. She kept talking about summer vacation. And then she turned to the Trader and asked, â€œWhat do you do?â€
The collapse of the worldâ€™s most powerful wealth-creating engine required everyone to take stock of their financials. One Lehman executive in Rye Brook, fretting about paying off a Hamptons summer house and a ski chalet in Vermont, panicked on Monday morning and laid off her nanny, who had been with the Westchester family for nine years. â€œThe nanny called me crying,â€ says Marla Sanders, who runs Advance Nannies and staffs Lehman homes. â€œOne of the children she had brought home from the hospital.â€ Sanders knows more cuts for her clients are on the way. â€œTheyâ€™re going to have to sell homes. The question is, will the homes sell? Theyâ€™re cutting some of the childrenâ€™s activities out, dance class, acting class. Are they going to have flowers delivered every day to their homes? I donâ€™t think so!â€