Wall Street gushing money Ah, the '97 bonus: It can put a Rolls in every garage

Personal wealth

December 29, 1997|By BOSTON GLOBE

NEW YORK -- The tip-off that the good times are truly rolling again is not the fact that the townhouse at 11 E. 62nd St. carries a $30 million price tag. It's that the real estate agent who's selling the place arrives in a chauffeur-driven, midnight-blue Rolls Royce.

"It's splendid," Sharon E. Baum says of both her car and the hottest housing market in a decade, "wonderful, nirvana."

And it's brought to you in substantial measure by Wall Street.

In a city that caters to the wealthy of the world, the wealthiest of all are the money mavens of the financial district. After a crushing humiliation in the late 1980s, they are back -- back beyond anything previously imaginable.

And the glow of their recovery will never shine more brightly than now, when one investment house after another is going about quietly informing its top performers of their 1997 bonuses.

By extremely conservative estimates, Wall Street will dole out a record $10.8 billion in bonuses to its Montecristo-smoking traders and Armani-suited investment bankers. And that does not include the truly gargantuan payouts -- the $300 million that leveraged-buyout specialist Henry Kravis is expected to walk away with, or the $1 billion that hedge-fund operators George Soros and Julian Robertson are each likely to collect.

Even in a nation numbed by big numbers, these are staggering amounts.

"It is unseemly," said former Salomon Inc. Chairman John Gutfreund, at one time the recipient of substantial bonuses himself.

"Maybe it's OK to make a million or two. But when you get to $25 million or $30 million, it's hard to figure. What basis is there for that?"

Wall Street bonuses have always been the stuff of lore, and the current lore is that this decade's Masters of the Universe are different from the last decade's.

"The biggest players this time are more restrained, more mature, more patrician," explained December's Vanity Fair magazine. "The Discreet Elite," concluded American Express after a recent survey of affluent customers.

Maybe.

Of course, when the car of choice is a Rolls ($125,500) or a Range Rover ($64,125); when the meat of the moment is Kobe beef at $15 an ounce; when a summer house in the Hamptons costs $3 million and a home off Fifth Avenue can run $10 million or more; when even holiday decorations are extravagances, blown-glass ornaments that turn a Christmas tree into a $30,000 affair, "discreet" is not the first word that leaps to the lips of most Americans.

And this bonus season's spending has only just begun. Reports Bill Stampf, who manages the Land Rover dealership in Southampton, the summer watering hole for New York's rich and famous: "I just got a call from a guy who wants two vehicles, one for in town and other for here. That's $100,000 of car over the phone!"

Stampf said he asked the caller what he does for a living. "Investment banker," the man responded. "Isn't everybody?"

As it turns out, no. In fact, the world of Wall Street bankers, equity traders, and hedge fund managers is incredibly small.

Although no precise count exists, what figures there are suggest that the ranks of the financial district's super-rich number no more than a few thousand.

What makes the Wall Street elite stand out despite their small numbers is not just that they are making a lot of money, and a lot more than ever before, but that they are making it at the very moment much of the rest of the nation is making substantially less.

A recent report showed that the gap between the nation's rich and poor, which started widening in the 1970s, has continued to yawn open in the 1990s, especially in New York.

The report by the Washington-based Center on Budget and Policy Priorities concluded that the average family in the top 20 percent of New York income-earners now makes 19.5 times what the average family in the bottom 20 percent makes.

That is up from 12.6 times a decade ago and is the widest gap between rich and poor of any state. According to the study's authors and independent analysts, it is largely attributable to Wall Street bonuses.

Wall Streeters seem painfully aware of the relationship between their reputations and the market's performance -- and frightened that infatuation could turn to fury if the market tumbles. That is why many are trying to be discreet with their new bonuses and not flaunt them the way their predecessors did in the 1980s.

The only problem: It is hard to keep so much good fortune under wraps.

Take housing.

At the height of the 1980s, Wall Street hotshots would snap up elegant New York apartments and resell them at a profit before they had moved in, according to George Van Der Ploeg, vice president of Alice Mason Ltd., one of the city's most exclusive real estate brokers. Van Der Ploeg went through three apartments.

By contrast, today's affluent buyers would not dream of doing such a thing, said Van Der Ploeg and others.

"My clients are cautious, conservative, sober," Van Der Ploeg said.

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