When Credit Suisse First Boston announced its latest round of job cuts in March, what was shocking was not who was getting fired -- some 300 bankers, including 50 or so managing directors -- but who was doing the firing. John Mack, the bank's CEO, surely signed off on the cuts, but pushing them through and taking the heat was Adebayo Ogunlesi, CSFB's newly appointed investment-banking chief.
Ogunlesi certainly had the brain power for the job. A Nigerian-born honors graduate of Oxford, Ogunlesi took a joint law and business degree magna cum laude at Harvard before managing to squeeze in a clerkship for the late Supreme Court justice Thurgood Marshall. And his impeccable track record at CSFB included conjuring, among other things, billion-dollar bond offerings for Venezuelan oil companies (while lecturing at Yale in his spare time).
As impressive as Ogunlesi is, the identity of the man he replaced, Hamilton "Tony" E. James, is what gave his appointment a more profound resonance. (That and Ogunlesi's willingness to wield the long knife, of course.) James, in many ways, is symbolic of the way Wall Street used to be: He prepped at Choate, went on to Harvard, and followed up with a successful career as investment-banking head of Donaldson, Lufkin & Jenrette. An eighties-era M&A whiz, he makes the intimacy of the client relationship his métier, building rapport during an afternoon stolen away on the links or a weekend at an exclusive fishing hole. His interests outside the firm are broad, too. He is a trustee of the Brearley School, board chair for American Ballet Theatre, and chairman of the executive committee for Trout Unlimited, a conservation society.
Now the 51-year-old James has been kicked upstairs (his new title is chairman of the investment-banking group), where he still manages client relationships; and it is the 49-year-old Ogunlesi, known more for his money-spinning innovations in the bank's project-finance division than for his fly-fishing skills, who is managing the old-guard banking elite.
Mack's original plan had been to pair Ogunlesi with Lebanese-born Walid Chammah, Morgan Stanley's bond wizard, to run the division. Chammah was a rising star at Morgan Stanley and a John Mack man to the core (Mack himself is of a more removed Lebanese origin). But the attempted poach was cut off by Morgan Stanley CEO Phil Purcell, who personally backed a plan to keep the $5-million-a-year Chammah happy.
Call it the new face of Wall Street. More than ever now, a wave of Indians, Lebanese, Africans, and others from the farthest reaches of the globe are stepping into positions of the highest power at firms all across the Street. For years, these immigrant bankers have been the stars of their trading desks, raking in millions for themselves and their firms. For the first time, they are running the most profitable divisions of the Wall Street banks.
Over at Merrill Lynch, for example, Arshad Zakaria, brother of Newsweek columnist Fareed Zakaria, was recently named to co-head the firm's global-markets and investment-banking business, the division responsible for a good 60 percent of the firm's revenues. The 40-year-old, Bombay-born Zakaria graduated summa cum laude from Harvard and was a Baker scholar at Harvard Business School.
Zakaria hit the ground running at Merrill in 1987, creating, with a team of bankers, a series of arcane tax shelters that would allow Merrill corporate clients to declare tax losses to offset big capital gains.
The fees from the shelters were lush -- though many of the deals, seen by the IRS as a tax dodge, were later voided in court -- and Zakaria reaped the benefits. By 1990, he had become managing director and was one of the firm's higher-paid bankers. It was an astonishing ascent for a 28-year-old kid, three years out of B-school, with no previous banking experience.
When current Merrill president, COO, and chairman-designate Stanley O'Neal won the bitterly contested race to succeed CEO David Komansky, one of his first personnel moves was to elevate Zakaria to his current post. "Arshad is a particularly dangerous Wall Street character," says a rival banker. "He's a mathematician who knows how to sell."
The culture of Wall Street has always been one that prizes raw talent. To be sure, there have been barriers. The Protestant classes that built up the first exclusive partnerships in the early part of the century certainly looked askance at the striving sons of Roman Catholic and Jewish middle-class families who came through the doors in the postwar years.
But the John Gutfreunds, Michael Bloombergs, Michael Milkens, Ace Greenbergs, and Sandy Weills had a combination of unstanchable ambition and intuitive market smarts that the old crowd never could fully match. They were the first meritocrats, relying not on whom they knew but on their will to win. Their hunger was deeper and their banking and trading skills were both acute and instinctive. Whether from the outside like Weill or from the inside like Milken, this new breed of titan cashed in when the eighties bull market came into full flower. "Wall Street has always been a meritocracy," says legendary hedge-fund investor Michael Steinhardt. "Sure there have been some restrictions, but in the end, results and compensation are always quantifiable. It's all about who brings in the most business to the firm."
During this very time in the early to mid-eighties, the next wave of outsiders, similar in many ways to the first wave, began to flood the street with résumés. They, too, were the sons (and daughters) of immigrant families, but now the families came from or still lived in places like Beirut, Bombay, Lahore, and Lagos. If anything, they may have been smarter than the first wave. Scholarship kids all, they had degrees spanning the quantitative realm: electrical engineering, physics, applied mathematics. No poli-sci majors here. These kids, growing up amid so much poverty, went to school to learn a trade, not to linger over the liberal arts.
On the Street, business was booming, deals were everywhere, and there was a desperate need for warm bodies, sharp minds, and a willingness to work killer hours. So the immigrant youngsters took their place on the trading desks and in the corporate-finance divisions together with thousands of other ambitious young Americans from the top schools. They kept their heads down and mastered the abstruse mysteries -- derivatives, options, convertibles -- of modern-day finance.
On Wall Street in the late eighties, selling plain-vanilla bonds and equities had become a low-margin business. But selling higher-margin esoteric fare like call-pricing models, 25-year project-financing bonds, and zero-percent-interest-rate floors made millions for the firm. And the brainy guys who created them became stars.
In the nineties, Wall Street firms became increasingly global. The search for new product sent bankers scurrying all over Asia, the Middle East, and Africa. Being an Indian when your firm was opening up an office in Bombay and trying to win a lucrative privatization mandate from the government in New Delhi became a feather in one's cap.
With the end of the bull market in 2000, Wall Street firms -- Morgan Stanley, Merrill Lynch, and Credit Suisse First Boston in particular -- punch-drunk and overfed after a decade of indiscriminate merging and hiring, started firing their overpaid and now underemployed senior bankers -- but not the new stars.
In August 2000, 25-year Morgan Stanley veteran Peter Karches was forced out by CEO Phil Purcell. Vikram Pandit of Bombay, India, replaced him as co-head of institutional securities. Then came Zakaria at Merrill Lynch and Ogunlesi at CSFB.
All told, these three have more than 25,000 bankers reporting to them. They preside over the most profitable and essential divisions in their respective banks. And they are hiring their own trusted lieutenants, who, no surprise, are just like them.