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book excerpt

From Street Freak: Money and Madness at Lehman Brothers by Jared Dillian. Copyright © 2011 by Jared Dillian. Reprinted by permission of Simon & Schuster, Inc.

Working at a place like Lehman Brothers provided certain perks. The firm offered us disability insurance that enabled us to retain a certain percentage of our earnings should we become incapacitated in any way.

This was interesting to me, because I had been locked up once already, and though I felt more stable than I had in years, who knew what was going to happen in the future? I wasn't so much worried about getting crippled by a deliveryman on a bicycle as I was worried about going out of my gourd. But when I met with the disability insurance broker, he told me that I was disqualified because I had been in the hospital in the past year.

Louis told me about his meeting with the disability insurance people.

"Did you notice that those guys know your comp?" he asked.

"Come again?"

"Your comp. He had my comp on a piece of paper."


"So. That is supposed to be confidential."

"Well," I said, "the firm probably releases that information to those guys. They need it if they are going to be calculating premiums."

Louis frowned. "Anyway," he continued, "so I asked him, 'If you have my comp, do you have everyone's comp?'"


"And he says yes. So I ask him, how much does a managing director make? He hedges a little bit and says it's a really huge range, but says that pay can vary from one million on the low end to multiple millions on the high end."


"So then I ask him, 'How much does a VP make?' And he says anywhere from a few hundred thousand up to four million."

"Four million?" I exclaimed. "What the fuck VP makes four sticks a year?"

"Right? That's what I said. I told him it has to be in structured credit or mortgages or something. You know what he said?"


"Nope: real estate."

It all made sense now. These drunks who went and bought Archstone, the drunks who had risked the entire firm, were getting paid assloads of money. The traders thought that the bankers were getting rich. The bankers thought that the traders were getting rich. They were both wrong: the people in real estate were getting incredibly rich. How much talent does it take to buy a building and wait for it to go up in price?

If you want to spot the next big bubble, all you have to do is follow the money. Look around you, and see who is getting paid more than the professional athletes. In the early eighties, it was the oilmen. In 1999 and 2000, it was the technology bankers. Now it was the real estate guys. I was hearing anecdotes of Europeans calling up New York City real estate brokers and buying million-dollar apartments sight unseen. The subprime lenders, like New Century and Accredited Home Lending, had already gone tits up. Subprime was dead. But commercial real estate was impervious to reason or logic.

I had busted my ass to get to Wall Street. I had gone to business school, working two jobs at the same time, but while I was getting paid reasonably well, I was still having trouble getting promoted, being politically deaf. For once, just once in my life, I wanted to fall ass backward into money. Just once. I wanted to blunder into some job that was going to pay me millions of dollars a year.

Then, in another thought, I probably still wouldn't be happy.