Hard Times On the Thames
Even London's Richest Are Falling Down

By Kevin Sullivan and Mary Jordan
Washington Post Foreign Service
Friday, October 10, 2008

LONDON, Oct. 9 -- The flash of cash by the super-rich bankers and traders who work in London's financial district had come to symbolize the capital. They ordered birthday cakes with emeralds. They ran up $10,000 bar bills at nightclubs. They drove, or were driven in, Porsches and Bentleys.

But now, said Kate Marshall, who works at a 24-hour concierge service called Quintessentially, bankers have suddenly stopped ordering champagne fountains for parties: "Gone are the days of flashy wealth."

The City, as the London financial district where 400,000 people work is called, has undergone astounding expansion in the past decade. Recently it had been touting itself not just as the chief rival of Wall Street but as the city poised to overtake it.

Now the boast is gone.

Prime Minister Gordon Brown vowed Thursday to "punish" the bankers and traders who helped create the financial crisis with "excessive and irresponsible risk-taking."

The London Paper, an evening subway tabloid, shouted in a headline, "Greedy Bankers Must Pay."

Just last year, analysts estimated that London's financial wizards were paid a total of $17 billion in annual bonuses, including more than 4,200 people who received bonuses of at least $2 million each -- all on top of their already fat salaries.

The joke was that there were so many wealthy that there were "the haves and the have-yachts." Now, with thousands losing their jobs and "for sale" signs sprouting up across some of London's wealthiest neighborhoods, it seems more like the "hads and had-yachts."

"It's about prestige," said Nick Ferrari, a popular talk-show host on LBC radio in London, who takes listeners' calls for hours every morning. "People think the British are not given the respect we deserve. The one thing we did best was finance, and we felt great about that. That's why this hurts so much."

As quickly as the City's fortunes have fallen, Brown's have risen.

Brown's approval rating dived into the teens in recent months as the slow-to-smile Scot, the bookish son of a Presbyterian minister, was criticized as having the charisma and leadership skills of a moose lumbering through a forest.

But in the past two weeks, public assessment of Brown has shifted. He hasn't changed, but his low-key style is now widely being interpreted differently. Instead of dull, he is seen by many as unflappable, a voice of moderation and restraint amid a screaming horde of Chicken Littles.

Calvinism, it seems, is back.

"All of a sudden, it's great to look like you haven't slept at all," said Ann Treneman, who writes about British politics in London's Times newspaper. "He's an austere Presbyterian. And he's finally found a crisis that's as grave as he seems to be all the time."

Treneman, in an interview, said Brown's command of financial matters -- he was chancellor of the exchequer, or finance minister, for a decade -- has impressed many and disarmed his political rivals. Even those who were calling for his head weeks ago are now falling over themselves to support his financial rescue plans.

"He really is able to talk that language, and people are nodding sagely as if they know what he is talking about," Treneman said. "Yesterday, when he said the words, 'We are leading the world,' people believed it. Three weeks ago, he couldn't lead a dog."

Treneman said Brown seemed thoroughly at ease leading amid the worst financial crisis since the Great Depression.

"It's like he's relaxing. It's weird," she said. "I assume when everything gets better, he'll become an uptight, incommunicative, impossible-to-talk-to guy again. But this has been the making of him."

Brown's response to the crisis is a bank rescue plan worth up to 400 billion pounds, or slightly less than the $700 billion U.S. bank bailout plan.

In interviews in and around the financial district Thursday, people said pressure for austerity, or at least the appearance of it, replaced conspicuous spending almost overnight.

Christopher Roth, 24, a London banker, sat at a table on a sidewalk near the River Thames on Thursday, eating a $7 chicken sandwich with his banker buddies.

He said he prefers to eat upstairs at the elegant OXO Tower Restaurant, owned by the Harvey Nichols department store company. There, along with stunning views of St. Paul's Cathedral and the financial district, lunch customers can enjoy fillet of beef with a "truffle cream bon-bon" for $55.

"Those days are over," Roth said. "We're not even supposed to be seen up there. But I hope this doesn't last long, because it's boring."

Mark Jackson, 46, who leads bicycle tours of London, said he has seen men in dark suits carrying their belongings out of banks after losing their jobs.

"They're not going to be kept in the manner they have become accustomed to," he said. "And that's good."

He said he never understood what the bankers actually did, but it never seemed quite fair that they were earning such fantastic amounts.

While many agreed, others said that less money washing around the financial district means less profit for their small businesses.

At the Chiltern Flowers shop, owner Bella Patel said that when bankers received their annual bonuses, she was flooded with orders.

She said one customer bought a bouquet of 100 roses for 500 pounds, or about $860. Now, she said, typical orders are $50 or $60.

"Things are changing, and it's going to get tougher," she said.

Geoff Smith, a former banker who works in a law firm that advises banks, said he thought that bankers were enduring a harsh "15 minutes of fame" that would eventually fade.

"I don't think the stigma will last long," Smith said. "You don't want greedy bankers, but you don't want banks going down, either."

Stuart Fraser, a top policy official for the city of London, said about 400,000 people work in the financial district. He said about 40,000 lost jobs in the dot-com crash almost a decade ago. Many people expect more jobs to be lost this time.

In an interview, Fraser said London's financial scene would be sharply altered by the crisis. He said bonuses would be "dramatically less." He worried that too much new regulation in London could trigger a "talent drain" to rising financial centers such as Singapore and Dubai, United Arab Emirates.

"Clearly, the size of the industry is going to shrink," Fraser said. "Many of the products just won't exist anymore. Bankers will be taking less risk and getting less return."

And many of them will be getting new jobs.

"We didn't stand outside of Lehman Brothers handing out business cards -- that would be morbid," Alexandra Andreae-Jones, a corporate headhunter, said of the failed U.S. bank that employed several thousand people in London.

But she did recently send her team down to coffee shops at Canary Wharf, trawling for recruits among the lattes and croissants in one of the sparkling centers of London's financial world.

Headhunter Malcolm Wood said he is advising clients to set reasonable ambitions. He said one woman recently called to say that her banker husband had been paid severance of 45,000 pounds, or about $77,000.

She complained that it wouldn't cover their monthly credit card bill.

Special correspondent Karla Adam contributed to this report.