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The Winners: Who Climbed in 2008

Warren Buffett famously said: "You only learn who has been swimming naked when the tide goes out."

True enough. But consider this: The receding tide also makes it easier to spot the few hardy souls who remain standing - or even kneeling - while most of their fellows lie motionless beneath the surface.

That's your answer if you're wondering how we managed to find the following nine firms, individuals and job-market sectors to list as "winners" (in no particular order) in a miserable year like 2008.

JPMorgan Chase

The "last man standing" among the group formerly known as bulge-brackets, in 2008 this institution made good on the cliché, "Find opportunity in adversity." JPMorgan snapped up Bear Stearns for a song in March with backing from the Federal Reserve, then picked up Washington Mutual's branch network from the FDIC for a mere $1.9 billion in September. While its financial results haven't been immune to the meltdowns in various asset markets, JPMorgan has suffered relatively less damage than its major rivals, both European and American.

Wealth Managers

It might seem downright cynical to label these professionals "winners" in a period when most of their clients suffered grievous financial losses. From a career standpoint, however, private banking is standing tall. Both Credit Suisse and UBS continue adding private-client relationship managers, while slashing thousands of jobs in other business units. Evercore Partners also hired several wealth managers recently. A survey by London headhunter Armstrong International suggests competition for talent between global banks and boutique wealth management firms will cushion private bankers' compensation, even as other bankers earn half or less than they earned last year.

Retail Brokers (A.K.A Financial Advisors)

Late in 2008, bank mergers ignited a recruiting war among institutions and headhunters aiming to lure brokers away from Merrill Lynch, Wachovia and other acquired firms. Top-tier producers, who bring in more than $1 million in annual fee revenue, reportedly were offered up to 100 percent of a year's production to stay put. Meanwhile, rivals dangled "transition" awards of as much 200 percent to brokers to jump ship.

Rep. Barney Frank

The House Financial Services Committee chairman long pressured Fannie Mae and Freddie Mac to weaken their balance sheets by guaranteeing more loans to less credit-worthy borrowers. Yet, the mortgage meltdown he thereby contributed to, followed by the November election results, has handed him more power than ever. Look for Robin Hood politics to influence the handling of bailout funds in the new administration.

John Paulson

In the 1980s, George Soros gained fame as "man who broke the Bank of England." This year, hedge fund manager John Paulson (no relation to the Bush Treasury Secretary) made profits and headlines for shorting shares of four of the UK's biggest banks. That's just one in a string of winning bets made by Paulson & Co. over the last two years - starting with being one of the first funds to take sizable short positions against sub-prime mortgage instruments.

Short-Sellers

Vilified for raining on stock promoters' parades and for borrowing (or sometimes failing to borrow) shares they wish to sell, these hardy pessimists were just about the only fund managers to make money for clients in 2008. Their bearish bets struck paydirt after Lehman Brothers' mid-September bankruptcy sent equity and debt markets into a tailspin. Short-selling was one of just two (out of 13) hedge fund strategies posting positive returns through the first 11 months of 2008, according to the Credit Suisse/Tremont Hedge Fund index series. "Dedicated short bias" funds returned 16.8 percent year-to-date, compared with a 19.0 percent loss for the overall index covering all fund strategies.

Risk Management

A year ago, some feared the sub-prime crisis would sink the reputation and status of risk professionals. Instead, it seems to have boosted their job prospects. That might be partly due to churn, since many institutions did sweep out policy-level risk officers and overhaul their departments. While bonus expectations and packages offered to risk-management pros switching firms tumbled during the year's second half, job security nevertheless looks a tad better for this group than for most other Wall Street departments.

Compliance Professionals

When things go wrong, hire more cops. That explains why these in-house rule enforcers continued to gain influence, headcount and compensation in 2008. No longer denigrated as a back-office function, compliance is inching its way up Wall Street's power structure, in tandem with risk management. Scandals and taxpayer-funded bailouts are driving a move toward new, tougher regulations - which will boost demand still more in 2009 and beyond.

Government Careers

Don't regulators bear much of the blame for tolerating the excessive leverage and rampant speculation that greased the path to the mess we're now in? Yes, but... Some of the same agencies that failed to head off problems last year are now being asked to step up oversight. That requires additional bodies. From a career management standpoint, more important than the number of openings is that for the first time in memory, a stint with a regulatory agency is likely to burnish rather than darken a front-office pro's resume. The latest evidence: The New York Society of Security Analysts is planning a Government Career Fair for next spring.

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AUTHORJon Jacobs Insider Comment
  • bi
    big r
    29 December 2008

    Yes, there are people who lied on the mortgages they took out but true diligence would have mitigated that, not allowing for the economic shambles we are in today. The thing is, if lenders/backers truly bore the risk of a loan going belly up, then they would of course be more selective and hawkish about whom their borrowers were. If the lenders can deflect that risk by selling the loan and making a little something over par, then why should they care about to whom the lend?

    The true cause, banks + wall street = GREED.

  • Kr
    Kristian Nammack
    24 December 2008

    There are always winners. Long- term I just remember the adage "steady pace wins the race."

  • js
    jshriver
    24 December 2008

    To say Rep Frank was involved in trying to avoid the privatization of F&F would be true. At that time conservatives were looking to move F&F's assets to the private sector (not to change the kind of lending it was doing).

    However, to imply that Frank's efforts to keep F&F quasi governmental had a large impact on the crisis is just not reasonable. Most subprime loans are held by companies (not the government--(http://www.bloomberg.com/ap.... The private sector was no more judicious in its general lending than F&F. Had it been, we would have a localized bailout of F&F and a strong economy.

    Equally unreasonable is to "blame" people for taking out loans they could not afford. If people lied on their applications, the blame is all theirs. If banks (the experts) thought lending to people with inadequate income and assets was a good idea (the novices) then it seems unreasonable to blame the novice. It would be like blaming a patient for opting for a surgery the doctor recommended.

  • Jo
    Jon Jacobs
    23 December 2008

    Jay, your comment prompted us to review the Barney Frank segment and correct a critical omission in the earlier version - acknowledging Rep. Frank's role as a leading enabler of the housing and mortgage bubble. --Jon Jacobs, eFinancialCareers News staff

  • Ja
    Jay M.Mitchell
    23 December 2008

    Barney Frank a winner? Easy on the Koolaide ...Your pal Barney was the man who single handedly prevented Sarbannes oversight from extending to Fannie and Freddie in 2002 ( NYT ) who's bumbling CEO's walked away with over $100 million exit packages and seats as Obama campaign financial advisors. It's a scary proposition to realize that this idiot has an even bigger tiller in hand and a party majority in the senate.

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