Personalities

Market forces are bigger than personalities, but personalities are interesting.
I remember a young man named Phil Purcell from Notre Dame. He was a nice fellow, thoughtful and intelligent. He was successful in his career. After ND he attended the U of C and the London School of Economics. After a stint with the consulting firm, McKinsey and Co, he joined Sears at the Chicago headquarters as director of planning and acquisitions. He managed Sear's acquisition of Dean Witter, and started up the Discover credit card. He managed the spin-off of Dean Witter from Sears and as CEO of Dean Witter led that brokerage to growth and profitability and eventually the acquisition of the investment banking firm of Morgan Stanley. Morgan Stanley enjoyed growth and profitability under his leadership. He emphasized the traditional businesses of consumer brokerage and investment banking and was not an advocate of the more highly leveraged investments coming into vogue on Wall Street.

He also declined to participate in the Big Apple culture, commuting to his home in Winfield, Ill. at week-ends. The New Yorkers labelled him as an egotistical outsider and when he dismissed executives who protested his conservative leadership the New Yorkers started a very public public campaign to have him ousted, which eventually succeeded.

Siding with the Group of Eight former partners at Morgan Stanley advocating Purcell's dismissal was Vikram Pandit, one of the Wall Street crowd who had been annoyed with Purcell's emphasis on a traditional banking and investment philosophy, and Purcell's failure to have Morgan Stanley acquire (or be acquired by) one of the high flying banks to increase available capital for bigger deal making.

The big bonus investment bankers ultimately were successful in forcing Purcell out at Morgan Stanley, but in retrospect, judging by results at the other investment companies and those high flying banks, I wonder if Purcell wasn't correct in his approach and vindicated by subsequent events. His buy out at Morgan Stanley was 60 million dollars, so I guess we don't have to worry about Purcell, and he's probably been happier to survey the carnage on Wall Street from his home in Winfield than he would have been dealing with the self promoting investment bankers on Wall Street.

Vikram Pandit, the Big Apple's favorite, ended up at Citigroup, from where he sparked yesterday's rally with a letter to employees saying he couldn't understand why the banks share prices were so low since the company had booked profits for the first two months of 2009. Well, Vikram, I suppose your timely announcement precedes the requisite write down of bad assets at quarter end, and might have been a ploy in your efforts to persuade Washington to amend the mark to market requirements, but if you really don't know why Citi's shares are in the tank, just stick around.