Where Are They Now?

If you’re looking for the biggest players in the Wall Street mess, most of them are right where we left them

Have you ever noticed,” the chairman of Citigroup, Richard D. Parsons, asked The Observer on Nov. 15, “that in the NFL, or in the NBA, or in Major League Baseball, this guy was a failure at Cleveland, and then he becomes the coach in Houston? These guys just move around from one team to another. Why is that? Because there isn’t a very deep pool of skilled talent that exists.

“And so, too, for a lot of financial stuff: Not everybody who’s walking up and down Fifth Avenue at noon is capable of running a derivatives book,” he went on, voice low, sitting in the 57th Street offices of the firm Providence Equity, where he’s a senior adviser. “It takes a certain amount of skill and knowledge to be in that business.”

By now, the idea that Wall Street’s cast of characters would have changed just because of a global financial crisis is considered quaint, as Parsons’ short laugh when asked about it showed. “Every time we stumble and fall we think we’re the first ones to do it,” he said. “Like, ‘Oh, the world is going to melt down!’ Well, it didn’t melt down. In fact, you can still go down to the corner and get a pizza.” Finance is still finance, and the bankers are still bankers.

And yet most of the what-happened-to-them-after-the-crisis look-backs, even the really interesting ones, give the sense that most of the executives who led the financial system to the precipice have faded into shadows. It’s true that there are enigmas, like Joe Cassano, the former AIG credit default swap kingpin, and a few retirees, but nearly everyone else carries on. When the players have moved, they haven’t moved far. Bear Stearns’ mortgages head Tom Marano, for example, is the CEO of mortgage operations at GMAC, now called Ally Financial. The Lehman chief Dick Fuld is doing “executive strategic consulting,” and his communications head, Andrew Gowers, is BP’s head of media.

Even Osman Semerci, Merrill’s fixed-income chief, responsible for increasing subprime exposure by about $50 billion in a single year, is a CEO, of the hedge fund giant Duet Group. Two recent AIG ex-CEOs, Bob Willumstad and Ed Liddy, are at private-equity firms, and a third, Martin Sullivan, is a deputy chairman at a major insurer. Top Treasury officials have landed at Bridgewater, GE Capital and PIMCO. Fannie’s old CEO Daniel Mudd leads the $44 billion Fortress Investment Group, and Freddie’s Richard Syron sits on the board of the biotechnology behemoth Genzyme.

Still, any then-and-now tally of Wall Street is bound to be incomplete for two reasons. For one thing, a focus on the main American banks meant leaving out foreigners such as Barclays, Deutsche and UBS, and also big U.S. private-equity houses and firms such as the risk manager Black Rock, not to mention mortgage giants and hedge funds. For another, the important thing to know these days isn’t necessarily that it’s the same players on Wall Street, but that it’s the same game. As the G20 summit meeting in Seoul, South Korea, closed earlier this month, Reuters quietly reported that the world’s largest banks, the ones that would be considered too big to fail, “won a reprieve of at least a year” on measures that would require systemically important institutions to rein in risk.

Divisions between regulators and bank lobbying “led to the softening of the capital rules,” the wire report said, “and put off final decisions about liquidity standards.” At that conference, the Citi chief Vikram Pandit complained that the new global banking rules known as Basel III are overly strict. A day before Pandit published those feelings in the Financial Times, as MIT’s Simon Johnson points out, a Nobel laureate and more than a dozen top economists wrote a letter to that paper explaining why the rules aren’t strict enough.

Back at home, meanwhile, some efforts to soften Dodd-Frank’s regulations have been quiet, like the 510 meetings with lobbyists since July, according to a Los Angeles Times tally, but others aren’t. Spencer Bachus, the Republican expected to replace Barney Frank as House Financial Services Committee chair, wrote about the “doubtful” benefits of the so-called Volcker Rule’s ban against proprietary trading.

Even if the ban stands, though, banks have been saying this fall that they can sidestep it because of a loophole for what’s known as principal investments, like Lehman’s leveraged multibillion-dollar takeover of the Archstone real estate trust in 2007. Banks such as Morgan Stanley have announced that certain proprietary teams will be spun off, though that would be unnecessary if Dodd-Frank’s rules are interpreted loosely, as Bachus is encouraging.

So are the dadaist old days back? Just before Halloween, two firms called Phoenix Capital and Taylor-DeJongh announced that they had started the first Washington-Baghdad financial services firm. (Iraq, their press release said, is “a potential major oil and gas play.”) A few days later, CNBC reported that Goldman might pay out compensation before the year’s end, because of 2011 income tax rates. After that, The New York Times said bonuses and overall compensation will both be up this year. “Are people who once earned staggering sums going to earn nonstaggering sums going forward? No,” Parsons explained on Nov. 15. The next day, the New York State comptroller released a report saying Wall Street will earn around $19 billion in 2010.

That would make it Wall Street’s fourth-best year ever.

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