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The Autumn of the I-Banker

Stripped of their superpowers, Wall Street’s wounded action heroes have been reduced to working for the government—or not at all. The meritocracy wasn’t supposed to work this way.

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Every weekday morning during the past decade, this trader—blond, handsome, forties—would take the 6:15 a.m. bus from his spread in New Jersey to Manhattan, then hop a cab to his office at an investment bank in midtown. Eventually, he would own five cars, including a Mercedes, a Jeep, and a Porsche—he maintained the Porsche in top condition, driving it about 1,000 miles a year—but he still preferred the warm cocoon of the bus, to calm his mind before he went to war. For five years, he was the head of a subprime-mortgage trading desk at a major bank. By 2007, the bank was forced to take tens of billions in write-downs from this business, $300 million of which occurred directly under him. “You could say that my losses were a rounding error,” he says, with a weak smile, over hot chocolate at Starbucks in a mall near his house. He is ambivalent about this career history. “I’ve started to take sleeping pills over the past year and a half,” he says. “You know, if I don’t take my pills, I don’t sleep.” He sips from the white paper cup. “But I take my pills, and I sleep fine.”

He looks good. He has a fine head of blond hair that he wears in prep-school dishabille, a calm tone of voice, and a fit physique, the product of active hobbies—surfing, skiing, shooting guns, and golf—as well as taking some time off to recover mentally from racking up millions in losses. He used to receive a bonus of $2 million a year (“In fact, you could argue, on the basis of my P&L, I was underpaid,” he says), which isn’t quite enough to retire forever. At least, he does not feel that way. “I’ve been poor, and trust me, I’m no fun to be around when I’m poor,” he says. “At first, I wanted to make twice my age as a salary, then five times, then ten times. Then it started to turn into a stupid conversation.” He graduated from business school in 1991, living off double coupons with his hometown sweetheart, and started at Salomon Brothers the following year, quickly working his way into the mortgage-finance group. Solly ruled the mortgage-backed securities market until the savings-and-loan scandal. In 1996, they wanted back in. They sent young bucks like him to Newport Beach, California, to package bonds from a new, dangerous beast: subprime-mortgage brokerage houses, which originated loans to consumers with bad credit. They were popping up throughout Orange County, in black-mirrored high-rises off highways in rapidly expanding suburbs, their parking lots starting to fill with the partners’ Ferraris and Lamborghinis. In his early thirties, he was spending half of his time at the Four Seasons in Newport, reviewing loans for the bank. Then he’d fly back to New Jersey first class.

There are times over the past decade, surviving two mergers with Salomon, climbing the ranks to bid on loan packages at a billion a pop, that he felt like the scratch-and-dent mortgage market was a good thing: Washington had issued a mandate for increasing homeownership, and he helped us get there. “The subprime-mortgage industry is great for people who don’t have access to credit or have lost their jobs,” he says. “The idea was to have them consolidate debts, get back on their feet in a couple years, and then find better terms.” There are other times when he knows that he didn’t do the right thing. “I didn’t know who any of the borrowers were, and I didn’t want to know,” he says darkly. “There are a lot of people in this country who should just rent.” Mostly, he feels helpless. “One person can’t change the world,” he says, eyes searching mine. “I would’ve stopped it if I had the power to stop it, but the firm wanted to be in it. Maybe the guys on the board didn’t know what was going on, but everyone else did. We’re making millions of dollars, and my position is supposed to be ‘I’m out’?”

After he was forced to fire his 60-person staff early this year, shortly before he was fired himself, he played with his toys for a couple of months—his cars, his boat, his collection of ten Les Paul guitars. “I just bought Slash’s signature Les Paul guitar,” he says, excitedly. “Look, I lost 50 grand on Lehman. I’m not going to deny myself a $3,000 guitar.” In fact, he also recently bought a Piper plane. “The day after I was fired, I was like, ‘Fuck it, I’m going to get a plane,’ ” he says. Then the government called. He’d been in touch with them before, when they would call him for market color. “The government understands a lot theoretically,” he says. “They needed to understand what was going on in the real world.”


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