Each year, a business book arrives, blurbed and buzzed as the new “Liar’s Poker”—another memoir of a young man from the provinces who comes to Wall Street and leaves disillusioned but wised-up. The original, which has sold one and a half million copies, according to its publisher, W. W. Norton, has been read by more or less everyone on Wall Street, often intently. Five years ago, I spent a day in a windowless Manhattan conference room interviewing seven twenty-something candidates for a job in private equity. In response to a mischievous question, each one chipperly told me that his or her favorite writer was Michael Lewis. “Liar’s Poker” had served for them as a career blueprint, a moral guide (on how to be in, but not of, the money machine), and the fuel of dreams.
Publishers fuel their own dreams with visions of best-selling perennials. And maybe they believe that “Liar’s Poker” can be topped. After all, the book delivers the cutting-edge news of what Wall Street was like in 1986.
The most recent contender is John LeFevre’s “Straight to Hell: True Tales of Deviance, Debauchery, and Billion-Dollar Deals,” published in mid-July. Last year, New York quoted LeFevre’s book proposal, which reportedly compared the future work to “Liar’s Poker.” “It’s time for an update that renders the original obsolete,” the proposal read. “My book will be the new benchmark.”
“Straight to Hell” follows Turney Duff’s “The Buy Side,” published in 2013, and perhaps the most widely discussed candidate of the past few years, Greg Smith’s “Why I Left Goldman Sachs,” published in late 2012. LeFevre and Smith’s books, in particular, have all of the elements that made “Liar’s Poker” sparkle: money, camaraderie, sex, rivalry, the lighted route to a potency that a twenty-eight-year-old can achieve even if he or she isn’t a rock star or a running back. But like all before them, Smith’s and LeFevre’s books aren’t even close to a new “Liar’s Poker.” And in the stories they tell, in the ways Wall Street has changed, we learn why that contest is probably over for good.
Goldman Sachs launched both Smith and LeFevre into the public eye. Smith, a derivatives salesman, worked at the firm for eleven years. He resigned, in March, 2012, via a Times Op-Ed, “Why I Am Leaving Goldman Sachs,” which started a national conversation on the culpability of his firm, the responsibilities to the customer of selling securities, and Smith’s own character. (I worked at Goldman Sachs for three years and left in 1998, three years before Smith joined.) LeFevre was the once anonymous author of a popular Twitter feed, @GSElevator, a chronicle, begun in August, 2011, of howlingly classist and sexist comments supposedly overheard in Goldman’s elevators. It turned out that LeFevre didn’t actually work for Goldman Sachs, or at a bank at all anymore, when he issued—and sometimes plagiarized—the tweets. He had worked for Citigroup, in London and Hong Kong, and was responsible for coördinating the syndication to investors of newly issued bonds.
While LeFevre and Smith both started on Wall Street in that innocent summer of 2001, their experiences diverged due to wildly different temperaments. In “Why I Left Goldman Sachs,” the book that followed his Op-Ed, Smith marvels at how neat it is to visit America’s first Wendy’s. LeFevre, in his book, marvels at his inability to remember if the woman he awakes next to (“quite curvy for an Asian chick”) is owed money for her services. Smith embodies what he thinks of as Goldman Sachs’s noble tradition of customer dedication by throwing a Ping-Pong match to a portfolio manager from the investment firm Putnam. LeFevre’s book nears its end with his providing Ping-Pong balls, for vaginal expulsion, to prostitutes in the Philippines.
The books seem written as case studies of the differences between the A.L. and N.L. of Wall Street: the Nerd Division and the Douche Bag Division. Yet both the prig and the pig understand that the task of a new “Liar’s Poker” is to illuminate Wall Street’s mechanics and morality. Smith traces the ethical decline of a firm that, by his observation, was formerly only “long-term greedy” and dedicated to serving clients, but now preys on them as “muppets.” Smith, who wrote his Op-Ed only four months after Occupy Wall Street protesters were evicted from Zuccotti Park, wants the reader by his side, getting sadder and angrier, as Goldman Sachs purportedly gets worse.
“Straight to Hell” is all worse, deliberately so, and smug. LeFevre’s workplace anecdotes include tales of nastiness, sabotage, favoritism, sexism, racism, expense-account padding, and legally questionable collusion. Most of the book, though, takes place outside the office, and those stories are largely what you’d expect: LeFevre’s bragging about how hard he partied and how successful he was is common enough stuff among Wall Street guys, fighter pilots, and nineteen-eighties Mets. But I was stunned by his descriptions of two-hour workday “lunches” at his apartment with his buddies, video games, and blow. Finance folks pride themselves on being workaholics; one of them usually shocks me not with tales of slacker afternoons but by replying to work e-mail from a sibling’s wedding.
It’s cruel to measure Smith and LeFevre against Michael Lewis, a master of pace, characterization, and concision. Lewis is also a journalist, and one of the oft-forgotten facts about “Liar’s Poker” is how well-reported of a book it is, covering the transformation of the bond markets within the wrapper of the author’s experiences as a young bond salesman at Salomon Brothers. “Straight to Hell” and “Why I Left Goldman Sachs,” written by mid-level bank workers who spent all or part of their careers in satellite offices, are myopic subsets of the memoir category Everything Interesting That Has Ever Happened to Me (in Chronological Order). But even if Smith and LeFevre demonstrated more curiosity, better prose, or real reporting, their books still would not have matched “Liar’s Poker” for a reason outside their authors’ control: both men were born too late.
During their Wall Street careers, Lewis, Smith, and LeFevre all sat on or adjacent to sales and trading “desks”—carrels sardined into the office floors where an investment bank’s salespeople and traders call on clients and other banks’ traders. I don’t think it’s a coincidence that most Wall Street memoirs are set in those Bloomberg-Terminaled rooms, packed tight to facilitate an early form of instant messaging (shouting urgently across the room, preferably while swearing in acrobatic combinations). It’s fun to read about what happens there: the hazing, the jokes, the guts needed for ten-million-dollar bluffs, the cultural clashes of a Joey from Bay Ridge sitting next to a Joshua from Yale. But investment banks’ sales and trading floors may also be uniquely ideal settings for a Wall Street memoir’s pop and fizz, enlivening what is, after all, a business of numbers on a screen.
The floors also used to be the center of the action. They are now ailing, and in that our technology-scrambled economy meets our culture. (And not only there. What would “Catch-22” be in the age of drones?) After the era of “Liar’s Poker,” the profits captured by investment banks grew almost unimaginably, for three reasons. There was volume: sales and trades of stocks, bonds, derivatives, and other securities grew by hundreds of trillions of dollars because of globalization, a growing economy, and the need to generate returns from the world’s savings. There was complexity: more investors were willing to invest in more-opaque securities in their desire to manage risk and, more frequently, to chase returns. And there was intermediation: investment banks were able to profit from packaging and creating new securities, and from facilitating the expanding volume. Banks’ sales and trading desks were the workshops of all three profit drivers—the R. & D. labs of complexity, the assembly lines of volume, the machine tools of intermediation.
Michael Lewis was fortunate, during his “Liar’s Poker” days, to have worked at one of those workshops at the beginning of modern, massive, securitizing Wall Street. But, by the final days of LeFevre’s and Smith’s careers, volume had flat-lined, complexity had become politically toxic, and—most important to their jobs—the muppets had revolted, with intermediaries becoming less necessary.
That decline of the intermediary is the subtext of “Straight to Hell”—the killjoy at the orgy. LeFevre’s coked-up lunches were financed not just by generic Wall Street profits but by irrationally excessive ones, during a period of low interest rates (between 9/11 and the global financial crisis) and inefficient new bond markets in Asia. The power of someone in his job—and the money to be made from underwriting Asian bonds—was, as “Straight to Hell” acknowledges incidentally, already dwindling during LeFevre’s career.
The decline of intermediaries and the rise of complexity is Greg Smith’s topic and complaint: he liked being an intermediary; he is uncomfortable with the new complexity. At Goldman Sachs, he complains, “The old-fashioned kind of business (making flat commissions on transparent exchange-listed trade) was increasingly seen as not profitable enough.” Smith is right: Goldman executives decided to pursue more trading on the firm’s own behalf and to sell more complicated securities. Smith, though, often seems to neglect the economic rationality of that decision. Banks’ sales-and-trading, market-making function—the intermediary role—is no longer profitable enough to support the whopping paychecks of the firm’s employees. Increasingly, securities owners, fed up by the pre-recession behavior of some traders and salespeople, and enabled by new technology, trade directly with each other, without the services of people like Greg Smith. Michael Lewis beat Smith on the back nine of that technological shift, too—it’s the backdrop of “Flash Boys,” his latest book, which was released last year.
Investment banks’ sales desks and trading desks aren’t going to disappear tomorrow. The sales function, at least, is still needed for certain tasks, like I.P.O.s. And those banks aren’t the only sector on Wall Street. A hedge-fund or private-equity memoir may grip the culture tomorrow. But sales and trading, the classic and maybe best setting for the Wall Street memoir, is losing its financial—and cultural—importance, through the disregard of savvier clients, regulations following the financial crisis, and most of all its entrance, like the rest of us, into the Age of Technological Disintermediation.
And a story of an ending will never be as inspiring to aspirants as a story of a dawn. This, above all, is why those two recent books won’t be anyone’s earnest answer to an interview question in twenty years. Which might be okay. We still have the original, which holds surprises on each rereading. We don’t need a new “Liar’s Poker” if we have fairer and more efficient financial markets. We don’t need a new “Liar’s Poker” if it means fewer memoirs whose showy debauches are paid for by unexceptional financial services. And we aren’t going to get a new “Liar’s Poker” if the current trends in securities trading continue. For that new “Liar’s Poker” would be the autobiography of a computer, talking to other computers, with no hijinks to report amid their silent hums.
