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Crisis reshaping Wall Street as stars scatter

Crisis reshaping Wall Street as stars scatter
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First Published: Sun, Apr 12 2009. 10 20 PM IST
Updated: Sun, Apr 12 2009. 10 20 PM IST
New York: There is an air of exodus on Wall Street—and not just among those being fired. As Washington cracks down on compensation and tightens regulation of banks, a brain drain is occurring at some of the biggest ones. They are some of the same banks blamed for setting off the worst downturn since the Great Depression.
Top bankers have been leaving Goldman Sachs, Morgan Stanley, Citigroup Inc. and others in rising numbers to join banks that do not face tighter regulation, including foreign banks, or start-up companies eager to build themselves into tomorrow’s financial powerhouses. Others are leaving because of culture clashes at merging companies, such as Bank of America and Merrill Lynch and Co. Inc., and still others are simply retiring early.
This is certainly a concern for the banks losing top talent. Vikram Pandit of Citigroup and Jamie Dimon of JPMorgan Chase and Co., for example, say it will be harder to break away from taxpayer support if the workers most capable of steering their banks towards recovery walk away.
But other financial experts believe it is the beginning of a broader and necessary reshaping of Wall Street, too long dominated by a handful of major players that helped to fuel the financial crisis.
“If the risk-taking spreads out to these smaller institutions, it is no longer a systemic threat,” said Matthew Richardson, professor of finance at the Stern School of Business at New York University. “And innovation is spreading out too. This is a good thing.”
Sensing a shifting tide, talented bankers who fear a dimmer future at banks that have taken taxpayer money are migrating to brash boutique firms such as Aladdin, which are intent on proving their critics wrong by chasing fast profits and growth.
©2009/THE NEW YORK TIMES
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First Published: Sun, Apr 12 2009. 10 20 PM IST