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Weekend Reader: Young Money: Inside The Hidden World Of Wall Street’s Post-Crash Recruits

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Weekend Reader: Young Money: Inside The Hidden World Of Wall Street’s Post-Crash Recruits

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Today, the Weekend Reader brings you Young Money: Inside the Hidden World of Wall Street’s Post-Crash Recruits by New York magazine and NYMag.com business and technology writer Kevin Roose. Roose immersed himself in the Wall Street recruitment process of young college graduates, which has found itself in its own predicament following the 2008 financial crisis. Since then, recruitment rates have fallen–becoming a Wall Street banker is no longer as glamorous as once perceived.

The excerpt below details just one of the eight relationships Roose cultivated during his three-plus years shadowing entry-level employees at several investment firms including Goldman Sachs and Bank of America Merrill Lynch.

You can purchase the book here.

One night, over dinner, I asked Derrick if he felt ethical about working in private equity—an industry that had been attacked as a form of “vulture capitalism” during Mitt Romney’s 2008 presidential run (and that would soon taint his 2012 run). He thought for a minute, took a sip of his beer, set it back down.

“Being ethical is kind of on a spectrum, right?” he said. “Like, I really like my firm, I really like the people I work with, and I think that within private equity, we do a good job of actually improving businesses rather than just going for quick money. But what conflicts me is that we don’t play by the same set of rules as everyone else. It’s a completely rigged system.”

I asked him what he meant.

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“Well,” he said, “we buy these little companies, we put the best lawyers and consultants in the world on it, and if it goes bankrupt, we never lose. We put in stipulations that don’t leave us liable, there are seventeen blocker corporations between us and the company.” He paused, then chuckled. “How are you going to out-money private equity? Good luck.”

But surely, I said, it wasn’t easy to identify the right investments, find the right ways to engineer a portfolio company’s finances, and time an acquisition with trends in the market. Wasn’t there also some skill involved?

“Well, look at it this way,” Derrick replied. “My dad’s up there, intelligence-wise, with anyone I work with, but the money doesn’t flow to him like it does to the guys I work with. It’s the system. People in private equity are smarter than your average person, but they’re not that much smarter. And as long as the system is structured like this—where, two years after the world’s worst financial crisis, you can get four-times-debt on a bankrupt business—it’s not going to change.”

Derrick let that hang in the air for a moment, then added with a wry chuckle: “Of course, I say all this knowing that the fucked-up system is how I have an apartment that I don’t worry about the rent for, how I take cabs everywhere and go out for nice meals and wear clothes that I don’t care how much they cost.”

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13 Comments

  1. daniel bostdorf February 22, 2014

    The except from the book posted is a chilling reminder that nothing has really changed on Wall Street. From the article: ““Being ethical is kind of on a spectrum, right?” he said. “Like, I really like my firm, I really like the people I work with, and I think that within private equity, we do a good job of actually improving businesses rather than just going for quick money. But what conflicts me is that we don’t play by the same set of rules as everyone else. It’s a completely rigged system……we buy these little companies, we put the best lawyers and consultants in the world on it, and if it goes bankrupt, we never lose. We put in stipulations that don’t leave us liable, there are seventeen blocker corporations between us and the company.” He paused, then chuckled. “How are you going to out-money private equity? Good luck.”

    Chilling.

    There is also an important article by Julia La Roche at BusinessInsider…It outlines the day to day on the street in the trenches view of what brokers today are dealing with. It makes for an interesting backdrop to what this book is all about.

    A Day In The Life Of A New York Stock Exchange Floor Broker

    Read here:
    http://www.businessinsider.com/what-a-nyse-floor-broker-does-2013-3?op=1

    Reply
    1. alannah mcgrowdie February 23, 2014

      my Aunty Sienna recently got a stunning red
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    2. sigrid28 February 23, 2014

      I picked up on exactly the same idea, the extent to which the 1% is insulated from most of the risks that the 99% must face daily, in their personal lives no less than in their workaday endeavors: taking care of themselves alone with seemingly inexhaustible resources. Perhaps I am more sensitive than most, as are principal caregivers in all families in with a young person or elderly individual (or both) who is coping with a lifelong disability. Families like ours are saved from many errant proclivities that might upset the apple cart by the scarcity of resources and an abundance of dedication to our loved one–or ones–a balance that is good for all. Neophyte Wall Street players lack such life-saving guidelines, which is a shame for them. However, they also put the rest of us at even greater risk than we would be otherwise because they lack healthy discretion when it comes to handling other people’s money–our money, in the final analysis.

  2. Independent1 February 23, 2014

    From what I’ve read about venture capital firms like Bain Capital, It’s hard for me to believe Derrick’s comment “we do a good job of actually improving businesses rather than just going for the quick money”. From the articles I’ve read, a high percentage of the companies “reworked” by venture capitalists end up foundering again and going bankrupt within several years after they’ve been “reworked” and of course the venture capitalists have extracted their money and no longer have any liability.

    But I think what disturbs me the most about our laws and the people involved in that business sector, is that our laws permit venture capitalists to in fact act just as the term “vulture capitalists” conjures, by allowing them to “fish the business marketplace”, just like a pirate will fish the ships on the sea, and select those companies which they can acquire for the cheapest price and withdraw the largest treasure. All the while demonstrating little or no ethics or patriotism as they focus on the plunder that’s available.

    And what’s even more disgusting to me, is that one of these vulture capitalists, actually had the audacity to run for president on the pretext that he was actually an American job creator, when in fact, he has over the past 15 plus years acted as one of the leading American job destroyers – playing that role even within weeks of the 2012 election.
    And I’m sure Mitt’s actions within the vulture capitalist sector of continuing to participate in buying up foundering companies for a song, reworking them in a way to destroy as many unionized jobs as possible, while working to send the jobs destroyed here to foreign countries like China while also stripping them of their pension assets while dumping the ongoing pension liabilities onto the America taxpayers. Is absolutely disgusting, especially at a time when America was struggling with high unemployment and was clearly one of the most unpatriotic examples to others in that industry as is imaginable.

    And as if destroying the largest small parts maker of the auto industry in America wasn’t enough during the auto bailout process, Mitt and his cronies actually tried to force GM and Chrysler into full bankruptcy by refusing to supply these companies with the parts they needed to restart production using the monies our government was providing them to get back on their feet.

    I’m sorry, but my impression of venture capital firms is not very good. Our laws allowing these vullture firms to leverage buyout foundering firms and “rework them” in a fashion that is most often based on how much money the venture capital firm can extract in the process, rather than in a fashion that is really best for the company being reworked, is a travesty and really needs revision.

    For those interested, here’s the link to an article:

    Mitt Romney’s Bailout Bonanza

    How Mitt and Ann made millions—and Mitt’s hedge fund donors made billions—from the auto-industry rescue that he condemned.

    http://www.thenation.com/article/170644/mitt-romneys-auto-bailout-bonanza#

    Reply
  3. Mark Forsyth February 23, 2014

    This article immediately put me in mind of several people years ago who having read Robert Ringers book about Winning Through Intimidation,turned themselves into assholes as if they had merely swallowed a pill.Seemingly,few if any really good rich people ever receive any publicity.Ringer always claimed to be a devotee of Ayn Rand.
    The excerpt above clearly illustrates the corroding influence of money on ones moral fiber is on the same level as the influence of heroin upon an addict.

    Reply
  4. paulyz February 23, 2014

    There is always some bad along with the good, but the Free Enterprise system created a tremendous quality of life, employment, & upward mobility in the United States. When the Federal Government steps in with excessive regulations & dictates what they wish, the jobs disappear to other countries, our economy suffers, and there is less ambition to start a business, thus more unemployment & poverty.

    Reply
    1. daniel bostdorf February 23, 2014

      What does this have to do with anything in the article? Nothing.

  5. daniel bostdorf February 23, 2014

    The except from the book posted is a chilling reminder that nothing has really changed on Wall Street. From the article: ““Being ethical is kind of on a spectrum, right?” he said. “Like, I really like my firm, I really like the people I work with, and I think that within private equity, we do a good job of actually improving businesses rather than just going for quick money. But what conflicts me is that we don’t play by the same set of rules as everyone else. It’s a completely rigged system……we buy these little companies, we put the best lawyers and consultants in the world on it, and if it goes bankrupt, we never lose. We put in stipulations that don’t leave us liable, there are seventeen blocker corporations between us and the company.” He paused, then chuckled. “How are you going to out-money private equity? Good luck.”

    Chilling.

    There is also an important article by Julia La Roche at BusinessInsider…It outlines the day to day on the street in the trenches view of what brokers today are dealing with. It makes for an interesting backdrop to what this book is all about.

    A Day In The Life Of A New York Stock Exchange Floor Broker

    Read here:
    http://www.businessinsider.com/what-a-nyse-floor-broker-does-2013-3?op=1

    Reply
    1. daniel bostdorf February 23, 2014

      ps…a reminder about trolls who post below:
      A social media troll as someone who seeks to lure or bait people into negative, disruptive rhetoric for their own edification or to commandeer an otherwise free-flowing discussion among colleagues.

      Usually off topic right wing Teaparty nonsense.

  6. rridgsr February 23, 2014

    They are being Brainwashed by this Gov. also so they really are in a losing situation

    Reply
    1. Guest February 23, 2014

      Off topic as usual when you post here at NM.

      We are tired of your general facist rants like the one you posted at “Crooks and Gansters” here: article title: Obama Appoints Hamas Adviser Robert Malley to Senior Director on National Security Council

      Your rant: rridgsr • 3 days ago
      “Obama has more Crooks and Gangsters in his Administration than are locked up in the pens .”

      and your homophobia at Conservative Byte:
      Discussion on Conservative Byte
      Article: Oklahoma’s Marriage Amendment Struck Down By Federal Judge
      rridgsr • a month ago

      Your posts:
      “Queers do not bother me because I stay from trash

      rridgsr • a month ago

      “May be they will all get AIDS what a good thing .”

      rridgsr • a month ago

      “Let the Nasty Dirty Bastards do like they have done for years stay in the closet .”

      Simply go away…

  7. charles king February 23, 2014

    That is some scary-S*** for the People of America Who? think they are living under the badge of Democracy but no, Capitalism, and rich Plutocracts have pushed the Peoples aside and call out that the Government is too big What? the hell is going on cause Now? we as American citizens need the help of our government. My advise to the people of America Get those Anti-government people out of our lives. Who? are they, you know Who? they are, the Republicans Who? cry that the Gov. is too big, the Independent WHO? cant make up its mind on What? is right or wrong in pertaining to yours and the Peoples’ Welfare, All the People FOR, BY, AND Of that is What? your Democracy is All about, VOTE any Democract out Who? cant seem to do the right thing for the people of America. (Critical Thinking) and Your Vote that is the key to a true Democracy. Peace! Thank You are the magic words with me. I Love Ya All. check-out those Capitalistic Pigs, Rich White men and Other Plutocracts in smalltowns USA. Mr. C. E. KING

    Reply
  8. 4sanity4all February 23, 2014

    So, the system has not been cleaned up, and the morally bankrupt are still working us over? Disgusting.

    Reply

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