There was a time when you could josh someone who didn't work very hard by saying that he kept bankers' hours, meaning roughly 9 to 3. It's a joke with a sour taste nowadays for the hundreds of men (and a possible handful of women) in the top ranks of investment banking, the subject of Paul Ferris' latest book. Most of those he interviewed in New York get to their office towers in midtown Manhattan or on the Battery by 6 a.m. or even earlier. Breakfast and lunch are usually working meals taken at the desk -- plastic food in plastic containers. They may travel to exotic capitals at Concorde speed, but when they reach their hotels, at whatever hour of day or night, the telephone messages are waiting and the work begins before their coats are off.
The "client" is a corporation or government that is borrowing hundreds of millions or billions of dollars, pounds, francs, marks or yen through the issuance of securities. In essence the banker (or more usually syndicate of bankers) puts up the money and, for a fee paid by the borrower, markets the stocks and bonds to various customers, who thereby become the ultimate lenders. But the client may be anywhere on the globe. And so may the customers. And so, too, may other banks in the syndicate and likewise competing banks eager to woo clients with promises to raise more money for them at smaller cost. And therein lie the reasons for the steady grind.
It is at this pace and on this scale that modern international capitalism functions, which is the subject of Ferris' brisk and engaging study. The bankers he deals with are, in his words, not those who cash checks, but "the fixers and dealers of the system," those who actually raise the capital. They direct the primal flow of torrents of money. In a given year, says Ferris, Wall Street will underwrite $100 billion of securities. Another $40 billion to $50 billion may be borrowed from great pools of dollar credits abroad, constituting the so-called "Eurobond" market. Participants in that market come not only from London, Paris, Stockholm and Zurich, but from Tokyo and Hong Kong as well. The fees and commissions may be only a small percentage of the total handled but still add up to huge rewards for these fiscal engineers.
What kind of people are they? That is what Ferris has tried to find out. It is not easy, for bankers are discreet by nature and by trade. But Ferris -- a novelist and biographer as well as a journalist -- was able to do much by simply sitting and listening intelligently. "In the end," he says, "people like to talk about themselves. It is the investigator's secret weapon."
The key word is change. The bankers' world is not what it was when captains of industry and captains of finance made gentlemen's agreements in private railroad cars, sons and nephews were trained to step into family partnership, and J.P. Morgan insisted stoutly to a congressional committee that the only basis on which he would lend money was "character."
Investment houses (or "merchant bankers," as they are called in England) no longer simply underwrite. They do a world of other things as well. They may be joined to brokerage firms that undertake the sweaty (and formerly disdained) business of peddling stocks and bonds to individual and institutional investors. They are often traders as well as brokers, buying and selling in huge lots, making and losing fortunes on fluctuations in the market. In addition, they furnish financial advice and services, two very elastic terms. The bankers do more than simply raise the cash: They orchestrate the entire procedure. And of course they are experts at discreetly channeling clients' money away from the grasp of tax collectors.
J.P. Morgan would not recognize the scene (particularly with the Japanese faces). And it puts a fearsome strain on "character," for not only is the competition sharp and the temptations enormous, but there are numerous opportunities to exploit insider information.
All in all, Ferris manages very well to convey large quantities of complicated information while focusing on individual characters. He has visited banks on three continents at least -- banks whose names are redolent of global conglomeration and have an almost romantic air about them -- Credit Suisse, First Boston, Paribas International, Nomura Securities, Sun Hung Kai. And he has found a rich variety of people in them.
They are a colorful lot, and it is to the author's credit that he holds the book in some kind of shape while pursuing them -- often to their obvious reluctance -- through their frantic schedules, their work places crowded with video-display terminals and phone banks, their deals and dreams. If, in the end, they do not fully answer such questions as what makes them run, how much they really earn and how it affects their performance, and whether the banking business is better served by teamwork or freebooting, that is not really Ferris' fault. "The Master Bankers" is not an economist's tome nor a final evaluation of a system, but rather a series of artful glimpses into the heart of -- well, not quite darkness -- but protective shadows.