The New Color of Money

"If you grow up hungry, you never want to go back," says Lebanese Bear Stearns vice-chairman Fares Noujaim.Photo: PATRIK ANDERSSON

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.

"I've been sheltered from the Gordon Gekko idea of Wall Street," says Morgan Stanley's Bombay-born Vikram Pandit.Photo: PATRIK ANDERSSON

Reporting to Pandit is Tarek Abdel-Meguid, whose father is from Egypt. Reporting to Zakaria are the Egyptian Ahmass Fakahany, COO of the institutional group, and Dow Kim of Korea, who heads up the fixed-income business.

There are a host of similarities that stick out among the new meritocrats. Few of them seem interested in golf (though at the ripe old age of 49, Ogunlesi is taking it up). They don’t engage in the flashy-charity, not-for-profit activities that tend to occupy older-crowd bankers. And, perhaps most important to their success, they are sticking with the firms they joined up with in the early eighties, showing a degree of fidelity rarely found within Wall Street’s increasingly mercenary culture. In many cases, their love for the firm blends in with the love they have for America. Be it Morgan Stanley or Merrill Lynch, the American dream is right there in the executive suite (which they are clearly within striking distance of).

No wonder, then, that they are so prized by Mack, Purcell, O’Neal, Bear Stearns CEO James Cayne, and others. Rocket-science smarts, a relentless work ethic, and a Kool-Aid-gulping devotion to the greater good of the firm – wouldn’t you entrust them with your bottom line?

“These people are in these positions because of their skills and because they are smart and competent,” says Morgan Stanley president Bob Scott. “They have been in the business for a long time, and they now have the credibility to be leaders.”

Sitting in a conference room high atop the new Bear Stearns headquarters on Madison Avenue, Fares Noujaim, a Bear Stearns vice-chairman, expresses his love for the firm. “These guys are my family. I’ve grown up with them,” he says in the over-pronounced American accent common to those who have learned English later in life. “We will die together.”

The words are spoken free of irony. Born in Kuwait, the 39-year-old Noujaim emigrated to Bay Ridge, Brooklyn, with his Lebanese parents at the age of 8, not speaking a lick of the local language. At 14, he was supporting himself, working as a mechanic and a grocery clerk; soon after, he put himself through Pace University, where he studied quantitative economics.

A brief stop at Goldman Sachs followed, where it was understood he needed an M.B.A. to advance further; he moved over to Bear in 1987. Tall and sinewy, Noujaim wears his silky black suit like a pair of pajamas. His full head of hair is very well tended. “I would say that I’m an Ace Greenberg P.S.D.,” he says. “Ace has a saying: ‘I won’t hold an M.B.A. against you; but I prefer Poor, Smart, and a Desire to be rich.’ “

That said, there is nothing flashy about Noujaim. He refuses to give the slightest hint as to how much he actually makes, though the going rate for someone of his stature on Wall Street is $5 million a year. Until recently, Noujaim was co-head of global-debt-capital markets at Bear Stearns, and he gained some industry renown by leading a $9.5 billion bond deal for Ford last October, the largest such deal at the time. As vice-chairman, he now sits on Bear’s internal board and, as he says, cross-sells the firm to prospective clients all over the world.

He leaves his home in Darien each morning – he is married with three young children – at 5 a.m. and is sitting at his desk by 6:30. Squeezing in a client dinner on most nights, he is usually home by 9:30 or so. He figures that he is on the road 130 days a year.

Why this relentless need to push himself? “If you grow up hungry, you never want to go back,” Noujaim says, speaking softly. “You can’t do things halfway in this job. You want to win every opportunity that you get. It’s that competing that I really love.”

Noujaim’s outside interests are few. An American citizen now, he returns to Beirut once a year to keep his rusty Lebanese Arabic in form. He plays no golf at all, does not follow sports, and has no raft of charity boards that he sits on. He does not read books and watches little TV. He will scan The Economist because he feels he has to and Car and Driver for fun. In the end, it’s all about Bear Stearns, which makes CEO and chairman Jimmy Cayne proud. “Fares is the prototype for the calling officer. He is one in 10 million,” Cayne says. “He is relentless. Totally driven. He is like the Energizer Bunny – he just never stops.”

Across the block on Park Avenue at JPMorgan Chase headquarters, the days are also long for Dina Dublon, Morgan’s Brazilian-born chief financial officer. Hit by the double whammy of its exposure to Enron and Argentina, the bank’s earnings collapsed last year, together with its stock price. Having to explain all this to a wary Wall Street was the 48-year-old Dublon. “For me personally, the stress level has been high,” she says. “But I think we need to deliver performance before we can look for a higher stock price. There are many skeptics out there.”

Prim and formal, Dublon sits on the edge of her chair in her spacious, sunny office off the hushed hallway of JPMorgan’s executive suite. The child of Zionist parents, she emigrated to Israel from Brazil at the age of 11. She earned a degree in math and economics from Hebrew University in Jerusalem and, after working a few years as a trader on the Tel Aviv Stock Exchange, came to the U.S. with her husband. After getting a business degree from Carnegie Mellon, she snagged an entry-level trading job in the trainee program at Chemical Bank in 1981, and 21 years and three mergers later, she now presides over JPMorgan’s financials.

In her current position, she is undeniably one of the more powerful women on Wall Street – a charge she takes seriously. “I do feel that I carry a responsibility beyond my professional duties,” she says. “And that is to be a role model for other women and to make diversity a greater part of the executive suite.” But here is the question: How does a demure foreign woman, albeit one with superior quantitative skills, survive twenty-plus years in the dog-eat-dog culture of Chemical–Manny Hanny–Chase–JPMorgan?

Maybe it’s the accent, which after all these years remains thick. “I think people listen to it with a greater degree of curiosity,” says Dublon. “Do they perhaps underestimate you? Could be. Maybe because I’m also a woman, I might be viewed as being less threatening.”

Like the savvy trader she once was, Dublon is not above using a little leverage when the time calls for it. Still, the burdens and time pressures of her office can weigh upon her. Dublon lives in Mount Vernon with her husband, a professor turned artist (his abstract art decorates the walls of her office), and their two children.

"I think people listen to it with a greater degree of curiosity," says JPMorgan Chase's CFO, Dina Dublon, of her Israeli accent.Photo: PATRIK ANDERSSON

At home, she speaks Hebrew with her husband, reads Israeli fiction for pleasure, and watches virtually no television. She is in the office at 7:30 a.m., is home by 8, and usually works another hour or so from there, to say nothing of the frequent work she does on weekends. While she does sit on the odd board and does some work for refugee women in Africa, the affairs of JPMorgan suck up most of her time. There is no time for trips to the gym. She admits to being ambitious and driven and ready for the next level professionally, but at times she wonders whether it’s worth it. “There are good days and bad days. It’s extremely draining,” she says. “But I do not worry about job security, and I have no need for any higher monetary reward.”

Nor does Vikram Pandit, Morgan Stanley’s co-head of Institutional Securities. Last year, the 45-year-old native of Bombay made $7.5 million; the year before, $10.6 million. It’s big money, but it’s also a big responsibility that he bears: With 15,000 people worldwide reporting up to him, Pandit oversees the division that contributes over 60 percent of Morgan Stanley’s $2.2 billion bottom line. Numbers like that tend to bring out a little bit of strut in a banker, but that’s not the case with Pandit.

Though his large office in Morgan Stanley’s flashy headquarters on Broadway is just down the hall from his boss Purcell’s, it is free of the doodads that generally adorn a high-level Wall Street banker’s lair. No tombstones, no framed photos on the wall of grip-and-grins with hotshots, no basketball hoop in the corner, no souvenirs from far-flung lands. Just an immaculate desk and a flat-screen monitor. “Maybe I’ve been spoiled,” he says with a self-deprecating smile. “But I’ve been sheltered from the Gordon Gekko idea of Wall Street.”

With his undergraduate degree in electrical engineering and a Ph.D. in finance from Columbia, Pandit joined Morgan Stanley in 1983 as an associate. In just seven years, he had become managing director, and by 1994 he was running the firm’s equity-derivatives business. In late 2000, in the wake of a purge of old-line Morgan Stanley bankers, he was handpicked by Purcell to co-run all the firm’s trading operations.

Pandit is a slight, bespectacled man who speaks in such a soft, self-effacing voice that he barely registers on a tape recorder. He is an unlikely corporate killer, which, say Morgan Stanley hands who know him well, is the secret of his success. Ph.D. smarts, his low profile, and his ability to attract powerful patrons (first Mack while he was president at Morgan Stanley, now Purcell) have been enough to send him on his way. “What attracted me to the industry was that this was a business that could be interesting and a lot of fun. But to do well, you have to put a lot of yourself into it,” he says. “I have to admit there is a sense of accomplishment that comes along with it.” Pandit speaks in a voice stripped of the slightest shred of ego. He speaks of the firm in place of himself. Not in the slick manner of a salesman but as someone who might very well bleed a little Morgan Stanley blue.

While Pandit’s hours are long, living as he does in Manhattan, he is able to make it back most nights to put his two young children to bed. He admits to few interests outside of work. As for golf, he has tried on a number of occasions to pick it up. He has a set of irons and is a member of a club, but has for the most part given up on the charade. “I don’t play golf. Period,” Pandit says. “I’m sure I’d enjoy it, but I just never got good at it.”

The New Color of Money