Wall Street Refugees Seek Work

By Aaron Elstein

May. 1, 2009

Lots of people cope with tough times by quaffing a cold beer or two. Drew Weinstein hopes folks will soon reach for one of his.

Weinstein, who last October lost his job as a research analyst at investment bank Cowen & Co., has said goodbye to Wall Street to take a shot at starting Magellanic Brewery. His plan is to hire other breweries to make his beer, a light lager he describes as “a better Budweiser.”

But what Weinstein may have in vision, he lacks in money and experience.

He needs to raise $2 million to get his new venture hopping so it can compete with the nation’s 1,600 other small breweries. Beer is a tough business, the 35-year-old father of two acknowledges, but he figures it’s worth a try—after all, the banking world in which he worked for nearly 10 years is gone for good. “At my age,” he says, “you don’t get many more chances to swing for the fences.”

More than 20,000 securities industry workers in New York have lost their jobs in this recession. And the Wall Street outflow threatens to turn into an exodus over the next two years: The Independent Budget Office forecasts another 30,000 job losses in the securities industry, or 25 percent of the city’s best-paid workers. By 2011, total financial job losses could surpass 77,000, when layoffs at insurers and other institutions are included.

Fearing a devastating brain drain of smart, ambitious people who no longer can afford to stay in New York, the city plans to spend $45 million to turn former Wall Street bankers into entrepreneurs by offering them training, office space and even funding for their startups.

Those who don’t yearn to become entrepreneurs are being encouraged to find work with the federal government, which has embarked on a radical overhaul of finance regulation and will need to fill the ranks of its expanding workforces in New York for everything from the Federal Reserve to the Securities and Exchange Commission.

It’s a painful adjustment for most. Jobs with startups or federal agencies pay a fraction of what the Masters of the Universe used to get, and the long slog of entrepreneurism or the slow drip of government bureaucracy can vex and even infuriate those accustomed to moving quickly. But there’s little alternative, considering how many banks and brokerage houses have collapsed or been acquired, or rely on federal assistance.

‘Profound, lasting change’
“What’s happening is much more than a cyclical downturn,” says veteran Wall Street recruiter Richard Lipstein. “This is a profound, lasting change in the landscape, and everyone will have to learn to cope.”

Andrew Friedman is trying as best he can. The 48-year-old former Bear Stearns executive was laid off twice last year, first after Bear was acquired by JPMorgan Chase, and then a few months later when his next firm, Broadpoint Securities, acquired a rival.

After 10 years of supervising research analysts, Friedman wants to become a banking regulator. He insists he’s ready to accept much less than he ever got paid on Wall Street—a useful outlook, since pay for bank examiners at the Federal Deposit Insurance Corp. tops out at $123,000.

“At this point, pay is not the only consideration,” Friedman says, citing “job stability, a nice pension and good benefits.”

To help unemployed bankers, the New York Society of Security Analysts, a professional group of 11,000, recently arranged a job fair featuring officials from the FDIC, the FBI and other agencies. The event is expected to draw as many as 400 people, quadruple the typical number, and NYSSA officials say they’ve seen a spike in membership so that people can attend the members-only event.

“Two years ago, everyone would have laughed at this,” acknowledges William Drawbridge, NYSSA’s director of membership, marketing and development.

Ex-bankers readily acknowledge the transition to government work can be frustrating. Spencer Cutter, 40, a former Lehman Brothers executive, is getting anxious because he hasn’t heard back from the Federal Reserve Bank of New York after interviews he thought were successful.

“I cannot get the HR person to return a phone call,” he says. “I know I can do something for them, and I know they need people, but for some reason there’s a disconnect.”

Little wonder that former bankers want to try to start their own businesses instead. They will become masters of different universes, but they will have a chance to be their own masters nonetheless.

At an entrepreneur “boot camp” sponsored by the New York City Department of Small Business Services last week, about a dozen casualties of the Wall Street collapse boldly laid out their business plans. The outsized assumptions that inflated the banking bubble can be hard to completely shake.

‘We are not daunted’
Weinstein, for instance, projects that his startup brewery could generate $50 million in revenue by 2013. “The risks are daunting,” he says, “but we are not daunted.”

Wall Street refugees may find that their experience is of little use in a startup.

Investing in long-term goals or sharing knowledge with inexperienced employees is anathema for many star traders or stock pickers, says Ari Kiev, a psychologist who specializes in counseling Wall Streeters. “Their confidence, naivete or arrogance leads them to think that developing a business is easier than it actually is.”

If nothing else, Wall Street vets are often experts in exuding the optimism needed to sell a new venture. Such was the case when boot-camp participant Anita Wong, who spent 13 years at Merrill Lynch & Co., pitched an idea for a stress-relief program called Melt With Anita. The program involves squeezing stress balls and using a foam roller on the hands, neck or feet.

“One hour of Melt With Anita, and you’ll feel better,” Wong says, adding that people still employed could follow the program at work. “It’d be great to do while on conference calls.”

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