The Accidental Investment Banker: Inside the Decade that Transformed Wall Street

273 Pages·2006·1.65 MB·English

by  Jonathan A. Knee

THE ACCIDENTAL
INVESTMENT BANKER
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THE ACCIDENTAL
INVESTMENT BANKER
·
Inside the Decade That Transformed Wall Street
·
JONATHAN A. KNEE
1
2006
1
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Copyright © 2006 by Jonathan A. Knee
Published by Oxford University Press, Inc.
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All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior permission of Oxford University Press.
Library of Congress Cataloging-in-Publication Data is available
ISBN-13: 978-0-19-530792-4
ISBN-10: 0-19-530792-5
1 3 5 7 9 8 6 4 2
Printed in the United States of America
on acid-free paper
For Chaille Bianca and Vivienne Lael
and William Grant
who says he wants to be an investment banker
ACKNOWLEDGEMENTS
As a f i r s t - t i m e au t h o r , I have many people to thank. Luckily
for the reader, most of them are current and former employees of
Goldman Sachs and Morgan Stanley who would prefer not to be cited. Their
support and insight were invaluable to this enterprise. For early encour-
agement and guidance I must also thank Clare Reihill at Harper Collins,
Brian Kempner and Peter Kaplan at the New York Observer, L. Gordon Crovitz
and Paul Ingrassia at Dow Jones, Pat Tierney and Dan Farley at Harcourt,
John Sargent and George Witte at Holtzbrinck, and Allison Silver, a long-
time friend and editor at the Los Angeles Times and New York Times.
For reading and commenting on various drafts along the way I want to
thank Beatrice Cassou, Mark Gerson, Bruce Greenwald, David Knee,
Myra Kogen, Chaille Maddox, Lisa McGahan, John Edward Murphy, Jeff
Reisenberg, Jason Sobol, and Clyde Spillenger. My two research assistants
Nicholas Greenwald and Amani Macaulay kept me grounded in reality. And
Stephanie Trocchia and Jeannie Esposito survived and supported my filing
system. Finally I want to thank my agent, Elaine Markson, and my editors
at Oxford University Press—Tim Bartlett who took it on and others who
dragged it across the finish line—for taking a chance on me and for their
guidance and confidence. None of these people should be blamed, how-
ever, for what I have actually wrought.
CONTENTS
Preface ix
chapter one A Chicken in Every Pot 1
chapter two The Accidental Investment Banker 13
chapter three An Empire of Its Own 18
chapter four “Let’s Ask Sidney Weinberg” 42
chapter five What Investment Bankers Really Do 56
chapter six The Culture of M&A 77
chapter seven The Rise of John Thornton 98
chapter eight The House of Morgan 110
chapter nine Cracks in the Façade 123
chapter ten Drama of the Gifted Banker 150
chapter eleven Take a Walk on the Buy-Side 157
chapter twelve “Save the Red Carpet for the Talent” 171
chapter thirteen View from the Top 188
chapter fourteen The Myth of Meritocracy 202
chapter fifteen King of the SLCs 207
chapter sixteen The Long Goodbye 216
Epilogue: Searching for Sidney Weinberg 222
Notes 231
Index 243
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PREFACE
T h o u s a n d s pa c k e d the pews of the Riverside Church on the Upper
West Side of Manhattan that foggy, wet January afternoon for the memor-
ial service for Richard B. Fisher, former leader of Morgan Stanley. Mayor
Michael Bloomberg attended, as did David Rockefeller and other digni-
taries. So did scores of young bankers who may never have met Fisher, but
for whom his name was legendary.
This outpouring of affection was both touching and somewhat unex-
pected. By the time he died at the age of 68 on December 16, 2004, Fisher
had become a marginal figure at the global financial institution with
which his name was once synonymous. Fisher joined Morgan Stanley in
1962 and became its president in 1984. By the time he negotiated the fate-
ful merger with Chicago-based Dean Witter, Discover and Co. in 1997—
making Dean Witter’s Phil Purcell the combined company’s CEO and Fisher’s
protégé John Mack president and chief operating officer—Fisher had been
chairman of Morgan Stanley for six years.
Yet well before the recurrence of the prostate cancer that ultimately took
his life, Fisher had been drifting, or rather been pushed, further and fur-
ther away from the investment bank he had once led. Although Fisher became
executive committee chairman immediately after the merger, this was
downgraded to something called chairman emeritus in 2000 soon after he
was nudged from the board. When, in 2001, a frustrated Mack resigned
and Fisher asked for the opportunity to address the board, Purcell deliv-
ered the painful news: the board did not wish to hear from him. Even Fisher’s