There’s a saying in the markets: “If you’re going to panic, panic early.”
The strongly held Wall Street philosophy of the anticipatory freakout may make following the stock market a bit of a pain – but it helps when it comes to potential disasters. It’s no surprise that Mayor Michael Bloomberg – a billionaire with close ties to Wall Street – imposed mandatory evacuations and mass-transit shutdowns hours or days before they seemed necessary. As I talked to people who work on Wall Street this weekend, it’s clear that banks and exchanges started early to prepare for the worst.
Tourists walk past a boarded up Bloomingdales store in New York August 28, 2011 soon after Hurricane Irene passed through the city. View the slideshow. (TIMOTHY A. CLARY/AFP/Getty Images)
In midtown Manhattan, it have been Waterworld, but instead it’s more like Mad Max. The streets are oddly deserted of businesspeople. I suggested to one of our building operators that many people didn’t hear that the New York subways were up and running by 6 am. “Or,” he suggested mischievously and probably correctly, “they heard and pretended they didn’t.”
With flooding a non-issue and the power grid in Manhattan working fine, the next question became how to get employees into work. “Public transit emerged as the biggest issue today,” one official at a major financial firm told me in an email late Sunday night.
The Wall Street ethos, of course, is to show up to work unless the building is actually shut down. (This may be the same tough-guy approach that causes so many Wall Streeters to be devoted marathoners, mountain bikers and triathletes). So the NYSE Euronext provided hotel rooms for some of its key employees on Sunday night, and planned to pay for transportation costs, including parking, for anyone who came in.
Goldman Sachs handed out vouchers on Friday to city-based employees that would pay them to take a car service. It’s a good thing that the subways opened on Monday morning – because by Sunday night that car service was totally booked and no longer taking reservations for the next morning’s commute.
Citigroup also offered “transportation alternatives” for its employees in New York City, a source there said.
But anyone who lived outside New York City – as many, many Wall Streeters do – the going was much tougher. The Metro-North Railroad and New Jersey Transit were completely closed; they’re the commuter lines that serve many of the upscale suburbs around New York. One official I talked to last night had lost power in his tony Westchester town, so he was talking on a cellphone while it was being charged in his car. The last time a major storm hit his town – in March 2010 – the power was out for a full 96 hours. So life isn’t going to be easy for a lot of people in the New York area.
So some firms didn’t want people to go to the trouble. Wall Street is a global business, and most people who work there are set up to work while they’re traveling – so nearly everyone is equipped with BlackBerrys, cellphones and laptops that keep them in touch with their offices even when they’re not in their offices. A Monday in the last week of August is as ideal as any to stay home.
So, a lot of firms told employees to just stay put. NYSE Euronext, told non-essential employees – the ones who aren’t critical to trading – to work from home. American Express shut down its tower in the World Financial Center downtown. Deutsche Bank, Merrill Lynch and other investment banks told employees to work from home if they could. Citigroup told me it offered its employees remote access to its network and alternative sites (the firm didn’t disclose them) where they could go into work if they couldn’t make it into their offices.
Many firms and exchanges also started their disaster planning early on the technology side. It may be 10 years after the 9/11 disaster, but Wall Street has learned its lesson well.
For instance, the CME Group and Nymex – the commodity markets – were calling city officials hourly on Friday to check on weather and transit developments.
The Nasdaq started testing its power and data systems on Thursday – and then did it again each day on Friday, Saturday and Sunday. The electronic trading network has four or five data centers (in undisclosed locations, of course) scattered around the metro New York area including New Jersey and Westchester. A Nasdaq source said last night that if power went down, the exchange could absorb not only its own trades, but the trades of at least two other stock exchanges. If electricity did go out – for instance, as it would during a heatwave – the Nasdaq could shut down its MarketSite in Times Square.
None of that was necessary, though, and the Nasdaq’s disaster plan never kicked into gear. None of its preparations got beyond the stage of monitoring its systems.
J.P. Morgan has been preparing since early last week, according to a source, and had backup generators ready for its buildings.
The NYSE Euronext also had backup generators – they’re the new black these days – and started its “business continuity planning” in the middle of last week. That included calling weather-tracking officials and starting the process to prepare for alternative trading if necessary.
Even as the system of high finance kept running, the consumer-finance system is still trying to keep up. The same banks who move billions of dollars among governments and companies electronically also have to move paper money to regular people – and since we get our money through retail branches that could be closed by floods and trees, there could be some delays in getting everything up and running.
Expect some rare breaks. For instance, Chase is waiving ATM fees for any customers in New York, New Jersey or Connecticut who use another bank’s ATMs. It is also waiving overdraft, transfer and insufficient funds fees as well as late fees on credit cards, business and consumer loans.
Panic early, cleanup early. Now if the Street only took the same approach to market bubbles.
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