Bye-banker

TV specials at this time of year frequently include a few minutes during which homage is paid to prominent individuals that died over the past 12 months. This year that list would be incomplete if it didn8217;t include at least one mythical figure: the powerful, overpaid Wall Street banker of legend. The year started badly: in January 2008 Socieacute;teacute; Geacute;neacute;rale announced that one of its traders had gone rogue and defrauded the bank of 7 billion dollars 8212; the biggest fraud in financial history till that point. And it ended worse: with the discovery in December that one of the most respected of Wall Street8217;s investment managers, Bernard Madoff, had managed to effortlessly surpass that 8212; by possibly defrauding investors of 50 billion dollars.

And in between those two troughs was the abyss. Among the besuited overpaid types, traders and hedge-funders may have had a bad year, but the year8217;s biggest loser 8212; literally and metaphorically 8212; was the investment banker. I-bankers have for decades been the Wall Street-est people on Wall Street: their public image, of self-aggrandising young men using the power of the four pillars of New York finance, the broker-dealers Merrill Lynch, Goldman Sachs, Lehman Bros, and Morgan Stanley to make themselves rich, has helped define finance for a generation. And this year the sources of that power dried up and the I-bankers inflated salaries, reputations and egos all went 8220;pop8221;.

A 8220;pop8221; heard 8217;round the world. What convinced most of the world of the seriousness of the sub-prime mortgage meltdown, the week it moved from an esoteric financial matter to a global crisis, was the third week of September. That was the weekend that Lehman Brothers collapsed, sending shockwaves through markets worldwide; the US government had refused to intervene, a possible buyout by the Bank of America failed to materialise, and Richard Fuld, the head of Lehman suddenly found doors shutting on him everywhere, and his phone calls unreturned. Just as he had earlier represented the investment bankers at their most cocky, his predicament now foreshadowed the fate of his colleagues, his bank and his entire industry. Lehman fell, Merrill was bought and Goldman and Morgan Stanley became commercial banks. The industry was over. For I-bankers, the party was over. And for the rest of us, the mystique was over.