Newspaper article The Christian Science Monitor

Resumes Are Piling Up on a Leaner Wall Street Main Street May Be Spared Ripple Effect from Belt-Tightening among Financial Firms

Newspaper article The Christian Science Monitor

Resumes Are Piling Up on a Leaner Wall Street Main Street May Be Spared Ripple Effect from Belt-Tightening among Financial Firms

Article excerpt

Until this spring, Roman was a "Master of the Universe." Executive head-hunters tried to recruit the Russian bond trader almost daily, with platinum salaries.

Then, in August, Russia defaulted on its bonds and devalued its currency.

Suddenly, Roman was out on the street with only a briefcase of resumes. So far he's sent out more than 300 applications. The response: two phone calls. "The competitiveness is very large," says Roman, who didn't want his last name used. The cold shoulder Roman is getting illustrates the swift change that is taking place in the cubicles and corner offices of Wall Street - a strata of the economy that perhaps most symbolizes the success of the Golden '90s. Only a few months ago, recruiters were searching far and wide for people like Roman. Now, in the face of global financial instability, "it's shrinking fast," says Douglas Leyendecker, a Houston-based financial recruiter. Layoffs are spreading among some of the most blue-chip brokerages - Merrill Lynch & Co., Salomon Smith Barney, Nikko Securities. The impact is rippling throughout New York and beyond. Already, some expensive restaurants are devising lower-priced menus. Luxury-goods dealers, such as antiques sellers and jewelers, are bracing for a sales slowdown. Not big spenders Anticipating smaller bonuses, Wall Street traders, whose Tiffany paychecks helped lift the entire city and create a new generation of rich, are cutting back on spending. With profits down 40 percent in the third quarter, Wall Street firms will pay lower taxes. Mercifully, a leaner Wall Street will not necessarily spill over onto Main Street, if history is any guide. Between 1988 and 1991, financial firms in the area, caught in the collapse of the junk- bond market, tightened their belts, reducing staffing by 10 to 15 percent. But while Wall Street shrank, the rest of the United States marked time. "It's mainly Wall Street's problem and not a problem for the rest of the country," says Richard Sylla, a professor of financial history at New York University's Stern School of Business. "But if we had a severe crash, no doubt the rest of the country would feel the effects." Until the latest round of layoffs, the securities industry had been a perfect example of an industry that was growing along with the buoyant markets. Some of the fastest-growing areas have been in the "exotic" areas of the business, such as trading "emerging market" bonds like the IOUs issued by the Russian government. Large pools of money known as hedge funds have also sprouted. Using borrowed money, they make large bets on the direction of interest rates, currencies, and stocks. But these areas are now suffering the most. Internet postings are filled with the resumes of out-of-work Russian bond traders. As hedge funds unwind their positions, they are axing their staffs. …

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