Property Grunt

Tuesday, September 23, 2008

Dead Alive

The American version is Dead Alive but you get the idea.

Gothamist gives the rundown on a series of articles detailing the current state of what is left of Lehman employees who now have been absorbed into Barclay’s. According to the NY Post it appears the sword of Damocles stills hangs above their heads. Till the end of 2008 Barclay’s will be doing evaluation to see who they keep and who they toss to the wayside.

On Saturday night, about 10,000 Lehman employees of the units that Barclays is buying were sent letters stating there will be no guarantees they will keep their jobs as that purchase is completed.

The letter - sent by Barclays President Robert Diamond, Barclays Chief Operating Officer Rich Ricci and ex-Lehman COO Bart McDade - said the "best" staffers would be given positions.

Sounds harsh but they got a better deal than their colleagues in the Canary Wharf.

One of the most sobering articles is by New York Magazine titled The Rage of the Previously Rich which profiles how a former Lehman trader is dealing with his new found status of being a member of the unwashed masses. Below are points of interest.

Like many on Wall Street, the Trader’s career was moving along briskly. By 2006, he had settled into a new $2 million house in Connecticut with a pool, and kept a pied-à-terre in Manhattan. With two young children, he had private-school tuition to cover. He had recently completed a home renovation, and now there was talk of a new porch with a built-in stainless-steel barbecue. The Trader estimated that he was two years from making enough money to retire and never have to work again.

The collapse of the world’s most powerful wealth-creating engine required everyone to take stock of their financials. One Lehman executive in Rye Brook, fretting about paying off a Hamptons summer house and a ski chalet in Vermont, panicked on Monday morning and laid off her nanny, who had been with the Westchester family for nine years. “The nanny called me crying,” says Marla Sanders, who runs Advance Nannies and staffs Lehman homes. “One of the children she had brought home from the hospital.” Sanders knows more cuts for her clients are on the way. “They’re going to have to sell homes. The question is, will the homes sell? They’re cutting some of the children’s activities out, dance class, acting class. Are they going to have flowers delivered every day to their homes? I don’t think so!”

Even with a huge reduction in expenses, these individuals are going to still be in it because those expensive homes are not going to be flying off the market anytime soon. Buyers are going to play wait and see and if they are lucky they might get a luxury foreclosure.

Of course, this is one of the meanings of moral hazard, that term that’s been used so much in recent months. At this level, it’s not a tragedy so much as the end of a specific vision of the American good life, one that’s helped to define the city and its suburbs for more than a decade.

Pain was relative. “One of my managers, he’s a guy who is a little bit older,” one low-level Lehman staffer said on September 16. “He has an $800,000 mortgage, a wife who can’t work, and two kids. That gives you a little perspective.”

Like Bear Stearns, Lehman’s culture was built on fierce loyalty to the firm. Senior staffers were granted bonuses that would be paid with 50 percent or more in Lehman stock, which they couldn’t unload for five years. In July, Dick Fuld approved a move to guarantee staffers a part of their bonuses midyear. But the plan backfired when staffers learned that they’d be assured only 20 percent of their previous year’s bonus and would receive restricted stock at $21 per share (“Great, so you basically shorted my own compensation,” one Lehman staffer groused).

Rich people are no different they have mortgages and bills to pay and they also get screwed over by the man.

Even if the Barclays deal would save many jobs, staffers were outraged at Fuld. Since Friday, September 12, Fuld’s domineering presence had all but disappeared from Lehman’s headquarters, and he was assigned a security detail. “They are sneaking him in and out of this place,” a senior Lehman staffer said. “They wouldn’t let him near this deal. It was for his own safety.” Asked what Fuld could do at this point to make it up to his company, the Trader said, “Stand naked in Times Square while I Tase you.”

Lehman staffers in London felt particularly stung. Barclays acquisition includes only Lehman’s New York operations, meaning that the employees at Canary Wharf are going to be jettisoned. On the morning of September 17, one London managing director sent a terse e-mail to Lehman’s president, and cc’d the entire London office. The message—subject line: “To Tom, Michael and Bart: The Email that Never Came”—complained bitterly that New York never expressed gratitude for London’s efforts even while they were thrown under the bus.

Then, just before 10 p.m. on September 16, Fuld finally sent a memo to the staff. “I know that this has been very painful on all of you both personally and financially,” he wrote. “For this, I feel horrible.”
It was the apology the staffers had sought for days.

Security detail? What homeboys needs to do is call Air Force buddies to see if they know anyone at Blackwater who can help him out because he is going to need to bring in the state militia, the LA Thunderbirds, the ghost of Steve f**king McQueen, and 10 f**king Roman Gladiators to watch his ass. Dick Fuld did not just fart in the middle of a state dinner, the man basically got up on the dining table, pulled down his pants and blasted his diarrhea on the all of the dinner guests, namely his employees.

Meanwhile the market continues to dive and dive.