Friday, February 20, 2009

The End Of Conspicuous Banker Consumption

The end of the good banker times is here. From elimination of first class airplane seats, to no more $1000 bottles of wine, to car service which actually has to compete based on price, the perks of being a banker are now a fond memory. Full bloomberg article is useful to give an idea of the carnage:

With New York Comptroller Thomas P. DiNapoli forecasting a decline in Wall Street-related activities that may slash tax revenue $6.5 billion by 2010, bankers are being told to cut back.

Citigroup Inc.’s Primerica Financial Services unit canceled a trip for salespeople to the Bahamas, the company said. Deutsche Bank AG outlawed car-service rides above $250, before 10 p.m. and on weekends, according to a company memo. Pricey vintages aren’t popular at Eleven Madison Park, where the 11-course “Gourmand Menu” runs $300 with wine.

‘Things Are Tough’

“No one’s buying the what-the-hell wines,” said John Ragan, beverage manager at the restaurant, which is in the same building as
Credit Suisse Group AG. Lunchtime diners used to say “‘Oh what the hell,’ and order a $500 or $1,000 bottle.”

In today’s climate, bankers “don’t want to demonstrate or flaunt any wealth,” said
Ben Morris, chief executive officer of Houston-based investment firm Sanders Morris Harris Group Inc. “The message is, ‘Gosh, things are tough, and I want to show everyone I’m trying to help.’”

Bowing to the new austerity,
Nougatine in the Trump International Hotel & Tower, a stroll from the Central Park West residences of hedge fund manager Daniel Loeb and Goldman Sachs Group Inc. CEO Lloyd Blankfein, introduced a $35 fixed-price dinner, including appetizer, main course and dessert.

Declining Bonuses

The reservations line at the restaurant, where entrees run from $22 to $65, is quiet because “so many people don’t know whether they’re going to have a paycheck,” said Tamara Wood, assistant to Chef
Jean-Georges Vongerichten.

Employment in New York’s securities industry fell to 168,600 in December from 187,800 in October 2007, or 10.2 percent, the state comptroller has
said. The average bonus declined 36.7 percent to $112,000 in 2008, according to the

Bonuses will be restricted for top officials at companies accepting cash infusions from the Treasury Department, and their salaries will be capped at $500,000 a year.

“I get the new reality,” Citigroup CEO
Vikram Pandit testified at a House Financial Services Committee hearing on Feb. 11. Pandit and the CEOs of seven other banks, including JPMorgan Chase & Co.’s Jamie Dimon and Bank of America Corp.’s Kenneth Lewis, were grilled by Chairman Barney Frank and others who said constituents were angry about how banks spent federal aid.

$1,250 a Night

In New York-based Citigroup’s Global Transaction Services unit, employees must book coach seats for most trips, according to a Jan. 27 memo. Business-class travel is only for red-eye flights longer than eight hours for meetings with clients, the memo said. First-class flying is no longer permitted.

At New York-based
American International Group Inc., castigated by Congress last year for spending $440,000 on a junket at a California resort days after accepting an $85 billion federal loan, new CEO Ed Liddy sits in coach when he commutes home to Chicago, said spokeswoman Christina Pretto. Former CEO Martin Sullivan’s $677,390 in 2007 benefits included corporate- jet travel, according to a regulatory filing.

Goldman Sachs’s annual hedge fund conference will be in New York, where the company is based, spokesman
Ed Canaday said. The March gathering had been scheduled for Miami’s Fairmont Turnberry Isle Resort & Club, which has two 18-hole golf courses and a spa where treatments include a $259 “Four Handed Massage.”

Six Old Handbags

A “handful” of Wall Street firms have canceled events this year at the
Breakers, a resort on 140 acres in Palm Beach, Florida, said spokeswoman Bonnie Reuben. Oceanfront rooms list for $1,250 a night.

Personal shopper Barry, who scouts such labels as Yves Saint Laurent,
Manolo Blahnik and Giuseppe Zanotti, said her clients sense the mood and don’t want to be vulnerable to criticism. Wives “feel a responsibility to their husbands,” she said. Some tell her, “‘I want to get a new handbag, but guess what, I’m going to get rid of six old ones that I’m no longer using.’”

While Wall Street’s thrift satisfies moralists, it alarms Doron Guez, who said he is firing four of 20 drivers at Eilat New York Limousine International.

“It’s like a cut to the throat,” said Guez, who owns the car service. "The hard worker guy gets too little and the Wall Street people who generate the money and are supposed to protect our money, they walk away with their bonuses."

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David said...

We're supposed to be heartbroken that the courtiers to this ersatz royalty are out of work? "Isn't it sad that those who catered to the their every extravagant whim don't have jobs?" Please. Let the creative destruction begin.