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Thu February 20, 2014
What It Was Like To Be A Wall Street Recruit After The Bailouts
Originally published on Thu February 20, 2014 7:05 am
Back in 2012, reporter Kevin Roose went undercover at a very exclusive party.
It was a dinner for a secret society, held once a year, at the St. Regis hotel in New York City. The secret society is called Kappa Beta Phi, and it's made up of current and former Wall Street executives — people like Michael Bloomberg, former heads of Lehman Brothers, Bear Stearns, Goldman Sachs. And every year the group holds a dinner to induct new people into the group — they're called neophytes.
No reporter has ever made it in. Roose wore a tuxedo, and got a seat at a table. He says he thinks the guests thought he was a waiter. The neophytes came out onstage, dressed fully in drag. They sang songs, like "Bailout King" to the tune of ABBA's "Dancing Queen." They told jokes, like:"What's the difference between Hillary Clinton and a catfish?" Answer: "One has whiskers and stinks; one's a fish."
January 2012, you'll recall, was the moment of Occupy Wall Street. Bank bailouts were still fresh. And banking executives who'd gotten bailed out were laughing about the bailouts and getting pelted with pieces of bread. "It was like The Wolf of Wall Street meets the Elk Club," Roose says.
Roose wondered if parties like these were an anachronism, or if this throwback scene was the kind of thing brand-new Wall Street recruits were looking forward to. What was the culture of Wall Street like after the crash?
For his new book Young Money, Roose found eight people willing to let him shadow them for their first two years on Wall Street. All of them, it seems, had an experience like Jeremy's, a guy who started out at the commodities desk at Goldman Sachs. (Jeremy, like all the names in the book, is a pseudonym.)
Jeremy's new boss asked him why he came to Goldman. Jeremy said something along the lines of "helping companies to hedge their fuel costs is this great function of the capital markets, and eventually those savings will get passed onto customers." His boss cut him off: "Dude. If you're not here to make money," Roose paraphrases, "this isn't the place for you. We're not here to save the world. What you're here to do is make a lot of money for yourself and for the firm."
That's the kind of greed-is-good motivational speech that would have energized Wall Street recruits in the past. But, Roose says, Jeremy was a little shaken up. That's in line with studies about what millennials want out of a job these days. Even if the job doesn't actually fulfill a higher purpose, today's young people want to feel like it does anyway.
Jeremy, like two other recruits that Roose profiles, left Wall Street to found a tech startup. Roose says that's pretty typical. "The sex appeal is in Silicon Valley now. That's where you go if you want to strike it rich. It has the cultural cachet that Wall Street used to have." He points to a study that cites Google, Apple and Facebook as the top three companies where young people want to work. The highest-ranking bank in that study is JPMorgan, and it comes in 41st.
"There's this idea that the tech industry is making things, they're bringing new things into existence," Roose says.
Out of the eight Wall Street recruits Roose profiled, only three are still in finance, and only one seems actually truly happy at the job. None seems destined for the Wall Street frat that Roose sneaked into. In fact, they'd never heard of it.
RENEE MONTAGNE, HOST:
Writer Kevin Roose covers finance for New York magazine, and he's out with a new book, "Young Money," about what life is like for the young recruits in Wall Street in the aftermath of the financial crisis. We assigned the reading to Planet Money's Zoe Chace.
ZOE CHACE, BYLINE: While he was researching the book, Kevin Roose snuck into the St. Regis Hotel in New York City to attend a once-a-year dinner for Kappa Beta Phi, which is a literal secret society made up of Wall Street executives. Members include Michael Bloomberg, former heads of Goldman Sachs, Bear Stearns, Lehman Brothers.
KEVIN ROOSE: Their motto is what happens in the St. Regis stays in the St. Regis.
CHACE: No reporter had ever been inside before. Roose rented a tuxedo. He says he thinks people thought he was a waiter. One of the main things that happens at this dinner is new members are inducted into the society - hedge fund managers, bank CEOs. They're called neophytes.
ROOSE: So, I'm sitting there and, you know, I see them come out. And the way this dinner works is that it's like a hazing ritual and these neophytes have to dress up in drag and do comedy skits, perform songs.
CHACE: Songs like "Bailout King" to the tune of "Dancing Queen." Or this parody of the song "I Believe" from the musical the "Book of Mormon." It's from Roose's phone in his pocket so the quality's not great.
UNIDENTIFIED GROUP: (Singing) I believe that God has a plan for all...
ROOSE: I believe that God has a plan for all of us, and that my plan is a seven-figure bonus. I work on Wall Street and Wall Street just believes.
UNIDENTIFIED GROUP: (Singing) (unintelligible).
ROOSE: And meanwhile people in the audience are throwing things at them - pieces of bread, you know, rolled-up napkins dipped in wine. I mean, it's like the sort of "Wolf of Wall Street" meets, like the Elk Club or something like that.
CHACE: Keep in mind this is early 2012. It's the middle of the Occupy Wall Street movement, bank bailouts were still fresh and Roose wanted to investigate. How much of an anachronism is a party like this? This seems like old Wall Street, a holdover from pre-financial crisis times. What about the new recruits, the very youngest, the ones who are maybe decades away from being hazed at the St. Regis? Would this seem as strange to them as it did to Kevin Roose?
ROOSE: I was really curious about what it was like now, what it was like to be in this hated, vilified sector as a 22-year-old. I knew that a lot of them were sort of scared and ashamed, almost, of what they had chosen to do.
CHACE: So, Roose followed eight 20-somethings through their first two years on Wall Street, and all of them had an experience along the lines of this guy, whom he calls Jeremy, at the commodities desk of Goldman Sachs.
ROOSE: You know, at one point one of his bosses asks him, you know, so, why did you come to Goldman? And he gives his sort of idealistic spiel about how allowing big companies to hedge their fuel costs is like a legitimate function of the capital markets and eventually those savings gets passed down to customers. And the guy sort of cut him off and said, dude, if you're not here to make money, like, this isn't the place for you. We're not here to save the world. What you're here to do is make a ton of money for yourself and the firm.
CHACE: Whereas an earlier generation of Wall Street recruits might have been energized by that comment, Jeremy, Roose says, was a little shook by this. And Roose says that's in line with studies about what millennials want from a job these days. Even if the job is really not for a higher purpose, to these young people, want to feel like it is. And Jeremy started fantasizing about a way out of Goldman.
ROOSE: He had this Google doc that he'd titled "Escape Routes" that had all these various things that he was thinking about doing.
CHACE: And like another kid in Roose's book, Jeremy headed west.
ROOSE: The sex appeal is in Silicon Valley now and that's where you go if you want to strike it rich. And it has this sort of cultural cache that Wall Street used to have.
CHACE: Three out of Roose's eight founded start-ups. One study Roose cites is that Google, Apple and Facebook are in the top ten of companies where young people want to work.
ROOSE: The highest ranking bank was JPMorgan, and it came in 41st.
CHACE: The Wall Street Journal once put it like this: the movie "The Social Network" is this generation's "Wall Street."
ROOSE: I think a lot of the people who came to Wall Street after the crash were grumps. And being at a Google or a Facebook, or even a small start-up, this sort of idea that the tech industry is making things, they are bringing new things into existence.
CHACE: Out of the eight first years Roose profiled, five no longer work on Wall Street. Of the three that remain, only one seems actually truly happy at the job. No one seems destined for the Wall Street frat that Roose snuck into. They'd never even heard of it.
ROOSE: The old Wall Street is dead. Wall Street circa Gordon Gekko is never coming back.
CHACE: To be clear, there are still limos, there are still parties, but recruitment from the Ivy League is way down and poaching from the tech sector is way up. Zoe Chace, NPR News.
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MONTAGNE: This is NPR News. Transcript provided by NPR, Copyright NPR.