The Year In Review
2001: Outrageous Fortune
(from the Wall Street Letter, 23 December)
Many would agree that any recapitulation of the noteworthy events in the financial services industry during 2001 must necessarily be viewed through a peculiar prism - more like a veil actually; a veil of smoke that until last week could still be seen emanating from the horrific field of carnage that prior to September 11 was the World Trade Center. Viewed through that veil, the standard-issue personnel poaching, regulatory saber rattling, senior executive ousting, and miscellaneous ranting by confused and angry players in every sector that typifies any year on the Street seem somehow to pale into near insignificance in the context of over 3000 dead, thousands more dislocated, loved ones lost and a great city struggling to maintain a stiff upper lip.
To be certain, there were some bona fide watershed events in 2001. For example, the U.S. stock exchanges' controversial conversion to decimal trading early in the year is a historic event whose full implications for trading spreads and trader fees remain to be seen, as does any potential change in philosophy or modus operandi by the Securities and Exchange Commission with the departure of "activist" chairman Arthur Levitt and the appointment of "SEC critic" Harvey Pitt.
Similarly - but not particularly surprisingly - when the bull market blasé was over, the bull doo-doo hit the fan over the integrity of securities analysts at brokerage firms. In June, the Securities Industry Association issued best practices guidelines to ensure that sell-side research is objective. Later that month the House Financial Services Committee began hearings to investigate these alleged conflicts of interest among analysts. And in July, Merrill Lynch became the first brokerage firms to bar analysts from owning the stocks they cover. The full extent of the market's growing circumspection regarding sell-side research remains to be seen.
But in the end, as always, it's what went on with the people on Wall Street that is the most indelible date stamp on the passing of another year. Many will recall 2001 as the year that John Mack lost a power struggle with Philip Purcell for the reins at Morgan Stanley, only to emerge shortly thereafter as the new honcho at Credit Suisse First Boston--this made possible by the unceremonious goodbye delivered to his predecessor Allen Wheat.
And who'll forget that this year Alan "Ace" Greenberg stepped down from his post as Chairman of Bear Stearns, a firm he joined in 1949 (However, word is that Ace still wields considerable clout at the firm); or that Stanley O'Neal, an African American, became president of Merrill Lynch, and almost immediately implemented a program to eliminate 10,000 jobs, and was widely perceived as positioning himself to take over as chairman of the firm from David Komansky ahead of schedule.
And WSL will certainly remember 2001 as the year the industry lost Dean Eberling, a well-known securities industry analyst with Keefe, Bruyette & Woods, based in the WTC, who in an interview with WSL early in the year unequivocally predicted widespread layoffs in the securities industry...at a time when most were loath to mouth those words. |
