By Michael Lewis
Feb. 13 (Bloomberg) -- My classmates from the 1985 Salomon Brothers training program have now scattered to the four winds. Of the original 110 only three appear to be employed by what remains of Salomon inside Citigroup; the rest have moved on to hedge funds, private-equity firms, mutual funds, other investment banks and even academia. There were only 10 women in the class and most have left the business entirely.
But a random sampling of my former classmates suggests that they still share a remarkably coherent view of the financial world. They look at Wall Street now, compare it to the Wall Street then, and note the same three big changes:
* Financial people have become a lot more quantitative and a lot less verbal.
* You need more schooling to gain entrance to the high- stakes table on Wall Street, but once you've got a seat it's easier than ever to make a fortune.
* And, finally, the culture of big Wall Street firms in 2007 is a lot more buttoned-up than it was in the late 1980s.
Cue Todd Thomson, chief executive officer of Citigroup Inc.'s Global Wealth Management division, to illustrate the cultural change more specifically. To recap: On Jan. 22, Citigroup issues a press release announcing Thomson's resignation, in which Thomson declares how much he's ``looking forward to exploring new challenges.'' The next day, citing three Citigroup insiders close to the situation, the Wall Street Journal reports that Thomson didn't resign but was fired by Citigroup CEO Charles Prince for ``lapses in judgment,'' including ``the inappropriate use of company aircraft.''
All Maria, All the Time
Three days later the Journal, drawing on what apparently is a direct line into the Citigroup executive suite, conveniently supplies a list of Thomson's indiscretions: flying CNBC journalist Maria Bartiromo to Asia on the Citigroup jet, then bumping Citigroup execs from the return flight so he might fly back alone with her; bankrolling Citigroup functions that feature Maria Bartiromo; using $5 million of his marketing budget to sponsor a TV show on the Sundance Channel hosted by CNBC journalist Maria Bartiromo, and naming Maria Bartiromo to a board he created inside the Wharton Business School.
Thomson also ``installed a wood burning fireplace in his office,'' but my guess is that he would have been forgiven that small romantic gesture if he hadn't made the others. I'll bet, also, that he would have been allowed to waste even more millions of dollars on causes only loosely related to the bottom line, if he had only wasted them less systematically. He was, after all, the boss of Citigroup's fastest-growing business. You don't kill the goose for spending a few of its golden eggs.
Let's Be Clear
Thomson's capital offense, obviously, was to use his status at Citigroup to underwrite his relationship with Maria Bartiromo. The Journal strongly implied but never came out and said that something more than business was going on between Thomson and Bartiromo, no doubt simply reflecting the off-the-record opinion of Citigroup's executive suite. To make its innuendo as clear as possible the Journal pointed out that after a Citigroup executive spotted Thomson dining alone with Bartiromo, Prince warned Thomson about getting too close to her. And I doubt he much cared who paid for the meal.
No, the executive in charge of the fastest-growing business at the world's largest financial company lost his mega-million dollar job for pulling strings to keep his female journalist friend happy. (Or, at least, impressed.)
The banker lost everything; in return the journalist surrendered nothing -- or at any rate nothing of her career. A few journalism professors moaned about CNBC's ethical standards - - Bartiromo interviewed Thomson on air several times -- but CNBC issued a statement saying, in effect, how proud it was of her. And that's that. All anyone will remember is that CNBC's anchor, in addition to being a babe, is as intimate with Wall Street power as a journalist can get. And while the intimacy was indeed impressive, the power clearly was not.
`I'm Huge'
The obvious question -- ``What was the man thinking?'' -- Thomson hasn't addressed, at least not publicly. But that shouldn't stop the rest of us from guessing, and my guess is that the soundtrack in the back of Todd Thomson's mind played the golden oldie from the glory days of the Wall Street alpha male:
``Look at me: I'm huge! Because I'm huge I have special needs. Because I make this place hundreds of millions a year, I can do whatever the hell I want. Technically, Prince may be my boss but I don't really have a boss, because without me he's not just short and tubby but toast. I make the money. The petty rules are for the people who don't make the money.''
Standing Ovation
He was thinking, in other words, a lot like a man in his position circa 1985 might have thought. The man's impulses were still designed for an age when, if you were a big enough hitter at a big Wall Street firm and you were caught in what appeared to be a dalliance with a prominent female journalist you got not a pink slip but a standing ovation. Even if you had used the corporate jet to pull it off.
That time has passed. Mess around on company time, using company assets, with a high-profile woman who isn't your wife and it doesn't matter how much money you make for the firm: You're fired.
You're fired, first, to prevent the firm from being scandalized in the newspapers. You're fired, also, because while the CEO might be able to rationalize your behavior to his male subordinates, or at least cow them into submission, he can't begin to explain it to the women in the firm. And, suddenly, there are a lot more of them around, in senior positions, who will make sure that the scandal, left unaddressed, finds its way into the newspapers. (Prince replaced Thomson with Sallie Krawcheck.)
New Deal
There is a new deal for the alpha male on Wall Street. He can make his millions, and he can still strut and preen and feel important. What he can't do is sexualize his financial clout. In the late 1980s it was fairly routine for men on Wall Street trading floors to order up strippers; when a prominent bond salesman was fellated in a conference room just off the trading floor his colleagues were more amused than shocked. Not long ago a pair of Morgan Stanley employees was fired for merely attending a strip club in their off hours. As one of my former classmates put it, ``the decorum in the marketplace has changed.''
Todd Thomson's mistake was that deep down he believed he hadn't made one. He's the rooster whose head has been removed but is still flapping around the barnyard, thinking he's still alive.
(Michael Lewis, the author, most recently, of `The Blind Side,' is a columnist for Bloomberg News. The views he expresses are his own.)
To contact the writer of this column: Michael Lewis in Berkeley, California, at mlewis1@bloomberg.net .
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