Hammer on Investment Banker's Coffin: Michael Lewis (Update1)

By Michael Lewis

Sept. 20 (Bloomberg) -- It's hard to ignore the aroma of calculation that rises from the pages of ``The Accidental Investment Banker,'' (already orderded! Wink*) the new addition to the fast-growing pile of Wall Street memoirs.

It's as if some editor told author and investment banker Jonathan Knee that to gain the love and trust of ordinary readers he need only cast himself as an outsider, gin up a bit of phony self-deprecation, and let the popular hatred of Wall Street do the rest. After all, the common man, and the media that serves him, are forever looking for new weapons to use against the Street, and willing to accept almost any level of phoniness from an author who gives them one. (Check out the sales of ``Liar's Poker''!) -_-;;

But it takes a special sort of self-delusion to spend the decade of one's 30s working for Goldman Sachs Group Inc. and Morgan Stanley, rise to the level of managing director, and continue to think of oneself as something other than a company man. And Knee, to his credit, doesn't quite have it in him.

What he does have instead is a superficial pose as a zany oddball always slightly out of place as an investment banker. The evidence of his zaniness -- and he offers it up repeatedly - - is his messy office, for which he is reprimanded by his bosses. Crazy, dude! The net effect is of the guy under the lampshade who hopes he's being mistaken for the life of the party.

The party is so naturally entertaining, however, that it overcomes this one guest's clumsy attempts to make himself charming. The ``Accidental Investment Banker'' (Oxford University Press, 272 pages, $25) is an interesting book. Indeed, given how interesting much of his book is, it's hard to believe that Knee could be as much like cardboard in the flesh as he is on the page. He's written the best account I've read of how the Internet boom and bust was experienced inside the investment banking department of a big Wall Street firm.

Perella, Paulson

Knee doesn't appear ever to have acquired much clout -- he jumped just before he was pushed out at Morgan Stanley to become a partner of Roger Altman's now-public Evercore Partners, where he remains employed. But he seems to have a gift for getting within earshot of powerful people. And while the rude things he writes about these people -- Joe Perella farts in meetings, U.S. Treasury Secretary and former Goldman chief Hank Paulson is a double-crossing office politician -- will wind up getting repeated, the value of his account is his attempt to explain the relationship between these people and the financial markets.

Values Deteriorate

His big point is that investment bankers once valued relationships, but now value only transactions. He sets himself up as a witness to this deterioration of values, but this is just another false note struck on behalf of his manufactured persona of virgin-at-the-brothel. If such a deterioration occurred -- if there was indeed ever a golden age when Wall Street people subordinated their own interests to their clients' -- it happened well before Knee got his first investment banking job, in 1994.

What Knee really witnessed, and what his book describes so well, wasn't the deterioration of investment bankers' values but of their importance. Their diminishment is between the lines of every story in his book, from the willingness of an important guy like John Thornton, formerly of the executive committee of Goldman Sachs, to quit after losing a power struggle to head the firm, to the ability of a hick like Phil Purcell to run roughshod over Morgan Stanley's investment bankers. Powerlessness is the subtext of the petty politics that appears to consume two-thirds of every Morgan Stanley banker's day and - - though Knee doesn't put it this way -- of the role played by the investment bankers in the Internet boom and bust.

Swept along by popular madness, and then used by Silicon Valley venture capitalists and entrepreneurs as the hired help, they nevertheless were made to take the fall when all went bad. (The butler did it!) Investment bankers might still manage to get themselves paid, but their authority and influence appears to dwindle with every act of venality.

Declining Prestige

Which of course raises a question: Why do investment bankers still manage to get themselves paid so well? Knee asks the question and offers this interesting observation:

``Investment banks and investment bankers always thought of themselves as providing a highly differentiated value-added service -- strategic advice based on quality. This is in contrast to lending, which investment bankers viewed as something of a financial commodity, selected purely on price. Clients, however, have now shown an increasing tendency to choose, or at least winnow down, their list of prospective strategic advisers based on investment banks' willingness to provide credit. This has subtly undermined banks, and bankers', sense of their own worth, as well as the clients' own belief in the value being added. It has contributed to the general decline in prestige of investment banks.''

Question of Fees

The mystery remains why corporate chief executive officers have never learned to tell an investment banker: ``If you want my business, cut your fees.''

But the fees are being cut, indirectly, and so, eventually, the paychecks must follow.

That's the real message of ``The Accidental Investment Banker'': Investment bankers don't have the power they once did and are unlikely to preserve even that.

The author needed only to examine himself honestly to find that out. He is no less obviously self-seeking than the people he describes; before he set about burning bridges he did a nice job valuing each and every one of them.

At the same time that he has written a brutally honest, and socially valuable, description of the investment banking business, he has been careful not to alienate the people who might prevent him from getting what he seems to really want: a life as an important person in and around Wall Street. (Though not as an investment banker.)

The list of the people whose opinion he cares about seems to include the financial press, whom he quotes and implicitly values, and corporate customers, about whom he is unfailingly polite. It's only senior people at Morgan Stanley and Goldman Sachs whom he feels at liberty to alienate. Surely, it's one sign of their dwindling importance that Jonathan Knee can now attack investment bankers so fiercely without the slightest fear of doing his Wall Street career the slightest damage.

(Michael Lewis is the author of ``Liar's Poker'' and ``Moneyball.'' His new book, ``The Blind Side,'' will be released next month.)

To contact the writer of this column: Michael Lewis in Berkeley, California at mlewis1@bloomberg.net .

Last Updated: September 20, 2006 07:12 EDT

형님, 그렇게 원조라는 자부심이 대단하시면 제발 Moneyball(about baseball), The Blind Side(about football)..이런책좀 그만쓰시고 다시 월가에 대해서 한바탕 써주시구랴. 초롱초롱!