Thursday, January 28, 2010

Hamptons needs Wall St. bonuses

If you’re snowed in on the East End and want to fill a few idle hours, try this: Open the Yellow Pages, call all the investment houses in the Hamptons and ask what they think about the big Wall Street bonuses.

First you’ll be struck by the many phones that simply don’t answer. Then there are the brusque deflections. “No, no, we don’t do anything like that,” said one woman at a place that begins with “Citi.”

I was thinking about the bonuses because the health of the Hamptons economy is often linked to the magnitude of the annual Wall Street baksheesh. You don’t have to look hard to find connections between the two out there in the Zeitgeist. In his Wall Street Journal column, James B. Stewart recently wrote that despite the biggest bonuses ever, some Wall Streeters are complaining that not enough will be in cash, causing a liquidity squeeze.

“I’ve been wondering just what kind of squeeze that might be,” Stewart stewed. He then went on to list a mogul’s likely expenses, including, of course, “that shingle-style mansion in East Hampton (not even on the beach) for $6.5 million.” And “two Mercedes SUVs for the Hamptons ($120,000).”

The East Hampton Star has been thinking about it too, as revealed in a recent story subheaded, “Real estate agents hope for Wall Street trickle-down.” Kate Meier’s lede summed up our ethical dilemma neatly: “Whatever the moral implications of doling out bonuses exponentially higher than most Americans’ annual income, real estate professionals agree that big payouts on Wall Street will mean good things for the market here.”

While doing my own stewing about it all, I unexpectedly hit paydirt. A Hamptons financier returned my call.
It was Marc Lowlicht, president of the wealth management division of Further Lane Asset Management. The company has offices in Manhattan, East Hampton, San Francisco and Santa Fe, but Further Lane is in East Hampton, so I think we can claim it as ours. Also, that’s where Lowlicht is based, where his home is and where his two kids are in school.

Lowlicht called the big bonus/big greed screed “a huge generalization.” There are plenty of financiers who aren’t getting these lavish bonuses, he said. Him, for instance.

Also his boss, J. Michael Araiz. “He’s a perfect example,” Lowlicht said. “He’s not taking any pay this year.” Instead, he’s using the money to pay the salaries of his 25 employees.

Furthermore, he said the bonuses are a major part of Wall Street compensation, for which people work hard and do important things. “If we raise $50 million for an alternative energy company that opens a plant in the Midwest and hires 150 new people, I think that’s value added. We’re improving the economy.”

But the AIG bonuses are “a whole different story,” he said. “I don’t think firms bailed out by the public should be in the same boat. You don’t get bonuses for bad management. I think what AIG did is disgraceful.”

As for the Hamptons and its perceived symbiosis with Wall Street greed, he said, “There will always be a love/hate relationship with the rest of the world,” but that’s not the way it feels from the inside. “Kids from families with lots of money go to school with the kids of day workers,” he said. “We’re all intermingled and we all get along.”

And at present, by the way, the Hamptons economy “is not great,” he said. “A lot of people are struggling. I know people who live like multimillionaires whose net worth is 70 grand. One of the most difficult things is to go from a certain lifestyle to a lesser one. People don’t go from driving a Lexus to a Toyota without suffering a lot.”

But as ever, the Hamptons will recover. “I think the market is stabilizing,” he said. And despite the steepness of the plunge, Lowlicht thinks the effects will linger only three to five years, instead of the usual five to seven.

“I think some policies are taking hold,” Lowlicht said.

Growth will be “muted,” but “we always find our way out. I think it’s a good dose of medicine. I think it’s put us back on the track of how to behave responsibly.”


Long Island Business News / January 27, 2010

No comments: