Misfits of the Universe

For decades, a career as an investment banker was the ultimate job. Before 2008, working on Wall Street, being stock market savvy and making millions of dollars was the definition of success in America. As author Tom Wolfe noted in Bonfire of the Vanities, a satire about Wall Street, investment bankers are “the masters of the universe.” Although investment banking may not be the most exciting or engaging job, a fortune could be made through in-depth knowledge of the stock market. For the past few decades, America has put the job of investment banking on a pedestal, lusting after the wealth and power associated with the occupation…until 2008, that is, when everything on Wall Street, and our country, changed.

There is no question that investment banking is important in our country’s economy. It is a great way for corporations and entrepreneurs to leverage their cash and balance sheets, and for small businesses to expand, by engaging the finesse of Wall Street. What’s more, as the paychecks of executives in investment banking have swelled to hundreds of millions of dollars, so too has America’s enchantment with the profession. For example, according to The New York Times, “From the 1960s through the 1990s, Harvard graduates who chose careers in finance made three times the pay of their peers.” Also, from the mid-1990s to 2006, “compensation in finance was 30 to 50 percent higher than in the rest of industry.” For reasons like these, Americans ignored that fact that investment bankers weren’t invincible, and could have their jobs collapse just like any other profession. But when the financial crisis hit the U.S. in 2008, our entire country got a wake-up call about the less glamorous side of working for an investment bank.

The stock market plummeted in 2008 because of greed and stupidity on the part of investment bankers and their clients. These industry leaders were greedy and careless, never worrying about how increasingly risky their deals were. But the general public shares some blame as well. After all, they helped put the investment banking industry up on such a high pedestal. Everyone lost touch with the truth.

But the truth became pretty clear last month in, of all places, Davos, Switzerland. Each year, the banking industry meets there to hold a World Economic Forum, where they socialize and debate about issues such as “collaborative innovation” and “the values and leadership principles for a post-crisis world.” Last year, for example, Bono and Bill Gates made a pilgrimage to Davos to rub shoulders with the gurus of investment banking. For $220,000, any company can attend and have a private meeting with the “industry leaders." This year, however, a lot of their talk rang hollow. The New York Times even published a satire on the entire week-long event, while America’s disenchantment and distrust grew.

In the meantime, back on Wall Street, JP Morgan’s management put a restriction on the use of office supplies. Employees must ask a secretary for a key to the supply room if they need a pen. And in San Francisco, Goldman Sachs recently stopped providing free soy milk and Diet Cokes. Last week, the water cooler was also wheeled out of the office. “Word went around pretty quickly,” said one employee. “Bring your own water.”

The days of Davos, Switzerland may be numbered. Investment bankers are no longer the “masters of the universe” in our very troubled 2009 world.