(Photo: Lego)

It might relieve you to hear that Arthur—43, with a wife and four kids and three cars and a two-story white clapboard center-hall Colonial in Connecticut and $15 million in the bank—doesn’t want your pity. He’s been a good provider, saved his pennies, sold his stocks the second the nasdaq took its first dip in March 2000. And he’s doing fine now, just fine. Except that now and then he seems a little adrift—glancing out of the sides of his eyes as if he can’t remember where he put his BlackBerry.

He is mindful of the tastelessness of complaining, of suggesting in any way that he is a victim. Which is why he insists he wasn’t really a business casualty of September 11—although, come to think of it, it did happen four months after the attack. The semantics of what happened are still in question. “I was ‘relieved of my responsibility’ but not ‘fired,’ ” he says, after eighteen years in the same credit-sales department at the same bulge-bracket investment bank. Did he mention that he was meeting every projection set for his department, all ten of them?

But the reality is that Arthur (not his real name; he’s far too circumspect for that) didn’t sleep at all the night he was let go. He stared up at the bedroom ceiling, trying to remember what he had said or done to piss them off. “I’ve never been that crushed in my life,” he says. “It’s like I had a child or a spouse die. That’s how I felt. I was totally blindsided. I’m an average guy on Wall Street, not a superstar. But I did everything I was asked. Met all the expectations. And in the end, was expendable.”

Get him talking about the whole thing—the indignity of a job search, the disconnect of aimlessly sitting at home while the wife lunches with her friends, the guilty pleasure of coaching his kids’ sports teams, four of them, on weekday afternoons—and he’ll wax a little poetic. “The first reaction is ‘Why me?’ ” he says. “Then you see it’s not just me.”

Arthur looks around town—New Canaan, Greenwich, a town like that—and sees a lot of unemployed investment bankers. He sees them at the schools, on the golf courses, in the supermarkets. Nobody really talks about it. They just put off that home renovation and say they’re consulting.

“You know how every recession has a name?” he says. “Once, there was a Rust Belt Recession. The last one was a White-Collar Recession. But this one isn’t even white-collar. This is Wall Street investment bankers getting blown out of the water. I like to call it the Top-Down Recession.”

They’re an endangered species now, Arthur and his colleagues—the komodo dragons of Wall Street. The assumptions of a career like his—become an investment banker, work ridiculously hard (and play hard, too), make a lot of money for others and a respectable pile for yourself—have been thrown out the window. In their place is nothing. No rules. No guarantees. No security.

One out of every ten employees in the securities industry has been relieved of responsibility since April 2001; by all reports, the cutbacks continue. But now it’s not just lost jobs. Two trends are at play in the Top-Down Recession: the worst layoffs in a generation and, for those who have dodged them, the withering away of Wall Street bonuses. In 2000, the financial-services bonus pool was $19.4 billion; last year, it was $7.9 billion. The average bonus dropped from $104,600 to $48,500. Wall Street hasn’t seen a two-consecutive-year decrease in bonuses since the eighties. “What I keep hearing now is base pay of $80,000, and the bonus is eat-what-you-kill,” whispered one once-and-future investment banker at a networking session for unemployed executives in midtown. “If you don’t close a deal, you don’t get a bonus.”

Without the bonus, the career collapses. “In the nineties, the model was ‘guaranteed bonus,’ ” says Andy Klein, the former force behind Wit Capital, the Internet investment bank. “The model today is ‘variable compensation.’ ” Klein’s new project, Soleil Securities Group, is an affiliation of Wall Street analysts who essentially work on commission. “These researchers are people who made on average millions of dollars a year, and now they’re making next to nothing,” he explains. “In our model, they get to keep 50 percent of what they produce. But if they can’t produce anything, they get zero. We pay them nothing. We’re not hiring them. We’re partnering with them.”

It’s a profound change in the way Wall Street people are paid—and the end, for the foreseeable future, of financial services as a bulletproof career. Investment banks that two years ago offered signing bonuses, relocation costs, and even guaranteed second-year bonuses to new M.B.A.’s, are now redefining the terms of the deal. “I talk to recruiters who’ve been at this for 30 years, and they’ve never seen anything like this,” says Tony Brown, director of staffing for Bear Stearns. “Even someone who saw the downturn in ’74—he says he’s never seen anything remotely like this. The year-end bonus has become discretionary. Now, to a student sitting on a business-school campus, that seems almost unfair. But how in the world can you expect a firm to guarantee a bonus when no one internally is guaranteed of even having a job?”

Even those who have kept their jobs have lost much of their income—not everyone stashed away as much as Arthur. The wealth on Wall Street was largely illusory, based not on salary but on bonuses that created paper millionaires. “People in financial services work all the time, and they are extremely sophisticated about trading, but they’re incredibly naïve about their personal financial situation,” says Maggie Craddock, a former portfolio manager who now works as an executive coach at some of the top investment banks. “What’s happened to a lot of these seven-figure people, they’ve become what I call ‘poor rich people.’ ”

How abruptly can you lose it? During the bull market, let’s say, like many mid-level people, you made close to $1 million a year—about $150,000 in base pay, the rest in bonus. But then, let’s say, one year that bonus is cut by 40 percent. And because of the ownership culture of these firms, as much as 60 percent of the bonus is in stock. And no one can sell that stock, because the company has placed restrictions on it, and in this recession it’s worth less every day. “You have professionals whose personal wealth is mainly in their company’s stock,” Craddock says. “Their bosses tell them, ‘If you want to eat lunch in this town, you’re gonna take this stock position. Eat it.’ ”

Which leaves a $200,000 cash bonus, for a total of $350,000—about $200,000 after taxes. But remember, you’ve been living like a millionaire—relying on your paper bonus, even borrowing against it, as if it were your salary.

For some, it means the end of a distinctly New York life. “My wife and kids are in Philadelphia looking at schools,” says Carl, 40, a fifteen-year investment-banking veteran laid off last fall. He’s crunched the numbers: If he sells the five-bedroom house in Chappaqua, he could buy a nice new house in Philadelphia for $700,000 and still have enough money to buy a business. In 2001, Carl earned $2 million, “but several hundred thousand of those were options that aren’t worth anything today.” In 2002, he earned $380,000 including his bonus. “In my current house, spending what we’re spending, on a pretax basis I’d probably need to make $350,000 just to break even.” That’s Wall Street money—and Wall Street isn’t hiring.