What146;s 34 billion on Wall Street?

Under the stewardship of Dow Kim and Thomas G Maheras, Merrill Lynch and Citigroup built positions in subprime-related securities...

Under the stewardship of Dow Kim and Thomas G Maheras, Merrill Lynch and Citigroup built positions in subprime-related securities that led to 34 billion in write-downs last year. The debacle cost chief executives their jobs and brought two of the world8217;s premier financial institutions to their knees.

In any other industry, Kim and Maheras would be pariahs. But in the looking-glass world of Wall Street, they 8212; and others like them 8212; are hot properties. The two executives are well on their way to reviving their careers, even as global markets shudder at the prospect that Merrill and Citigroup may report further subprime losses.

Maheras, who left his job as co-president of Citigroup8217;s investment bank, has had serious discussions with several investment banks, including Bear Stearns, about taking on a top management position, people who have been briefed on the situation said. And he has also been approached by investment firms willing to back him to the tune of 1 billion or more if he decides to start his own hedge fund, these people said.

Kim, who until this spring was a co-president at Merrill Lynch with oversight of the firm8217;s trading and market operations, has been crisscrossing the globe in recent months raising money for his new hedge fund, Diamond Lake Capital. The ease with which Maheras and Kim have put themselves back in play is a reminder that for many top Wall Street executives, humiliation and defeat need not result in a professional exile. And they aren8217;t the only ones. Zoe Cruz, the Morgan Stanley co-president who was forced to leave her job after 10.8 billion in subprime losses, has been approached by investment banks, hedge funds and private equity funds about a senior management role, people briefed on those discussions say.

8220;It is always an assumption on Wall Street that it is not the individuals that lose money; it8217;s the system,8221; said Charles R Geisst, a Wall Street historian and a finance professor at Manhattan College. 8220;You can fail big time, but you can also succeed big time.

8220;They think it8217;s bad luck,8221; he said, so the attitude is 8220;let8217;s give them another chance.8221;

The quick comebacks of these executives stand in stark contrast to the plight of the hundreds of investment bankers who have received pink slips in the last two weeks. They also illuminate a peculiar aspect of Wall Street8217;s own version of a class divide. Senior movers and shakers often land on their feet, no matter how egregious the losses tied to them. The industry rank and file, however, from mergers-and-acquisitions bankers at Bank of America to sales executives in Citigroup8217;s hedge-fund servicing business, see their jobs eliminated despite being far removed from the subprime crisis.

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Perhaps the most notorious example of failure leading to prosperity is John Meriwether. Ousted from Salomon Brothers in 1991 for his role in a bond trading scandal, he became a co-founder of Long Term Capital Management, the hedge fund that nearly collapsed in 1998, rattling markets worldwide. He has since founded a second fund, JWM Partners, with assets of around 3 billion.

More recently, Brian Hunter, the energy trader at Amaranth Advisors whose disastrous bets led to the disintegration of that 9 billion hedge fund, is now advising a private equity fund called Peak Ridge on starting a hedge fund. Howard A. Rubin, a trader at Merrill Lynch, who lost 377 million in 1987, quickly landed a job at Bear Stearns, where he had a successful career.