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Is Wall Street different after Lehman?

Jeremy Hobson Apr 26, 2010

Is Wall Street different after Lehman?

Jeremy Hobson Apr 26, 2010


Tess Vigeland: As we’ve already mentioned, the stock market did a whole lot of nothing today. The major indexes moved just a fraction of a percent. And yet, the Dow Industrials are now within striking distance of a psychologically important threshold: They’re about to hit the number at which they stood before Lehman Brothers collapsed.

In other words, the Dow is about to erase all losses from the financial crisis. So what better opportunity to ask: What — if anything — has changed on Wall Street since then? Marketplace’s Jeremy Hobson went looking for some answers.

JEREMY HOBSON: I moved from Marketplace’s Washington bureau to the New York bureau exactly a week before Lehman Brothers crumbled. I was getting used to a new city and a new beat. And on my first morning on the job — Monday, September 8th, 2008 — I took a trip to the New York Stock Exchange.

Ted Weisberg was my guide. He’s been a trader for decades, and runs a brokerage called Seaport Securities.

TED WEISBERG: We were kind of looking at financial history before our very eyes.

That’s because September 8th was the day Fannie Mae and Freddie Mac were seized by the federal government. The opening salvo in the crisis we all remember so well.

But Ted Weisberg says in hindsight, it was just another bad day in his 50-year career.

WEISBERG: It looked like the end of the world financially in the early 70s… ’73, ’74. And I’ve seen it a couple of times since, ’87. The reasons are always different, but the emotions of the moment are always the same. And if you’re in this business long enough, this business rewards you for these experiences and you learn from these experiences.

And he says Wall Street has learned.

So does Ray Shirazi. He’s a securities and derivatives specialist at the law firm Cadwalader Wickersham and Taft. His office on the 33rd floor of the World Financial Center overlooks the site of another disaster — the 9/11 attacks. But he’s got memories from the financial crisis that will never leave him.

RAY SHIRAZI: During the collapse of one of my clients, I remember my clients who had been there for 10 years carrying their boxes out the door. And to me that was a defining experience.

Because he says it showed him how fragile the U.S. economy is, and how much care is needed to maintain it. It showed him the real-life effects of all the decisions being made in the towers of lower Manhattan.

SHIRAZI: The world has become much more careful in the post-Lehman world. People are very, very much concerned about the safety and security of their assets.

He says even before any meaningful regulation is passed, the market is adjusting to a new landscape. Mortgage-backed investments and those complex Collateralized Debt Obligations are out.

Shirazi says these days, most investors are looking for the same thing.

SHIRAZI: Simple cash market transactions that are very, very transparent. I think that there’s an appetite for that.

I wanted to check in with one more person I met in my early New York days.

Christopher Miraldi — a 20-year Wall Street employee — laid off in the early days of the Great Recession. We met up in Central Park. He tells me he’s still in touch with people on Wall Street, and he doesn’t think anything has changed.

CHRISTOPHER MIRALDI: They’re out to make money. That’s what motivates them, that’s what excites them. You know if the music is still playing, they’re gonna dance. And, you know, it’s only when the market stops, and there’s no buyer for that security will they stop selling it, but if they can sell it, they will market it.

Miraldi says new regulation is the only way to change things on Wall Street. And he says his former colleagues should take it from him — change isn’t such a bad thing.

MIRALDI: I think no one likes to see their salaries go down or their jobs change, but it’s not the end of the world when you have to adjust your lifestyle. I mean there are so many things that are still great in life, so…

As I leave Miraldi in Central Park, he heads off with a smile. After months of unemployment, he’s starting a new job — managing a group of employees for the Census Bureau.

In New York, I’m Jeremy Hobson for Marketplace.

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