Is This the End of Wall Street As They Knew It?

February 13, 2012

By Gabriel Sherman, New York magazine

Last Tuesday, about 150 people packed into the soaring marble-floored atrium of the Museum of American Finance, housed in the former Bank of New York Building on Wall Street. Large murals on the wall extolled American industry and Wall Street’s role in building businesses. The gathering was a conference honoring the long career of legendary Vanguard Group founder Jack Bogle, but as I listened to the conversation, the hypercapitalism of the aughts sounded like a museum exhibit from an earlier time. Bogle, who built Vanguard into a $1.6 trillion mutual-fund giant, was the guest of honor, but the clear star of the event was Paul Volcker, who caused heads to crane when the genial six-foot-eight former Fed chairman arrived carrying a stack of newspapers and took his place in the audience as Ken Feinberg and Lynn Turner, the former chief accountant for the SEC, debated how Wall Street compensation got so insane. During their panel, I noticed ­Volcker flipping through his copy of the Financial Times, stopping to read an article headlined “Forget Big Bonuses, a Pay Squeeze Is Coming.”

During a break in the panels, attendees streamed up to Volcker, and a book editor implored him to write his memoirs. It was a dramatic reversal for Volcker, who had been shunted aside during the financial-reform debate but found himself back in the center after Obama embraced a version of his prescriptions. “It’s beginning to have an impact,” he told me when I asked about how his rule is changing Wall Street. “It is a factor in moderating compensation, because compensation was very high for these traders, and that kind of spread through the business into people who didn’t feel like they had a fiduciary responsibility.” As much as anything else, the daylong conference at the museum exposed a generation gap. The Wall Street that spawned the careers of Bogle and Volcker was very different from the one that attracted the next generation of hyperambitious young people to New York and Greenwich, Connecticut, eager to have their lives measured by a number—seven figures or more, they hoped. For those people, especially, it’s difficult to get their minds around a Wal-Mart future for finance. “It’s been three years, and people have to readjust their spending habits,” a former Lehman executive told me. “People have been in different stages of denial.”


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