Twilight Of The Übermenschen

Twilight Of The Übermenschen

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In one respect, this is true. Lazard is no more Felix Rohatyn. Goldman Sachs is longer Sidney Weinberg no. The First Boston Corporation is longer Bruce Wasserstein and Joseph Perella no. But this is old news. Those investment banks (or their successors) have grown to be institutions in the sense that nobody larger-than-life personality defines its image, its reputation, or its capabilities. Professor Davidoff also points out the inverse: that an individual’s reputation is no more irrevocably linked with that of his or her current or prior employers. Both of these observations make intuitive sense.

The tremendous size of large global investment banks normally renders one person too small and insignificant to make a lot of a difference. Rarely does a customer deal with one individual when they transact with an investment bank or investment company nowadays; there are teams and groups of experienced and faceless people who execute a client’s bidding. In fact, investment banking institutions have implemented the business lead of the rest of Corporate America and brand.

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This is merely a natural progression of the overall economy, where people much longer purchase goods and services based on the neighborhood no, individual reputation of a product owner recognized to them straight. Brands separate reputation from individuals and make it portable across geography, time, and whoever is actually preparing your Jamba Juice across the counter.

Some investment banks-notably Goldman Sachs in the 1980s and 90s-used to produce a concerted work to sublimate individual bankers’ reputations and even identities to that of the mothership. Others cultivated the superstar culture, to higher or reduced success. But now, a good well-educated insider would be challenged to identify a material quantity of specific superstars on Wall Street. Every bank or investment company has become a brand first. In my business nowadays, the name on your business card that counts most is not yours; it’s the name of your employer.

But the Professor’s explanation of investment bank is incomplete. If superior technology and gobs of capital were all it getting to compete, my industry would have been bought out years by the lumbering behemoths of commercial bank ago. They have always been bigger than investment banks, have a lot more capital, and have plenty of money to spend on a lot and technology of experience automating financial transactions.

Furthermore, if automation and capital were the only factors that mattered, we should be prepared to see much more price competition among investment banks than we do. For, as I’ve described in these webpages many times, practically everything investment banking institutions do is highly commodified. Finally, Professor Davidoff’s image of global investment banks as well-funded, highly automated factories staffed by faceless automatons does not answer a nagging question: Why do investment bankers make a lot money?

If labor is so interchangeable and replaceable, why 50% or even more of revenues in my industry has historically gone and continues to go toward compensation? If we bankers are so meaningless to our customers, how are we able to skim so much cream off the top? Remember that the common Goldman Sachs employee makes approximately ten times the median income of a family of four in this country.