If you read only one 9/11 story…

…Read Joe Nocera’s column about the odyssey of Sandler O’Neil & Partners

This story stopped me dead in my tracks because I remembered how the overwhelming losses at this investment banking firm came to symbolize the devastation of 9/11. And then I realized I had not thought about the company for, say, 59 months–the price you pay, sometimes gladly, for living on the West Coast. If you feel desensitized, Nocera will pull you back.

If you read only one 9/11 story...

If you read only one 9/11 story...

New York Times
Sept. 9, 2006

Time passes. Time heals.

A few days before the fifth anniversary of the 9/11 attacks, I went to see James J. Dunne III, the managing partner of the small investment banking firm Sandler O’Neill & Partners. Sandler O’Neill, you may recall, was one of the hardest hit firms that day. Its primary offices were on the 104th floor of the south tower of the World Trade Center; of the 83 employees (out of a total of 171) who were in the office that awful morning, only 17 made it out alive. Among the 66 who died were two of the three men who ran the firm: Herman Sandler, the co-founder, and Christopher Quackenbush, who headed investment banking.

Jimmy Dunne was the junior member of the ruling troika. He had been spared because he was on a golf course in Westchester County that morning, trying to qualify for an amateur tournament. Truth to tell, before 9/11, he was more focused on golf than on work. At 45, he had one foot out the door.

But I learned that only later, and it came as a surprise. The Jimmy Dunne I met shortly after 9/11 was more committed to his work than anyone I’d ever known. Thrust into a role he had never expected and had never prepared for — not just to lead Sandler O’Neill, but to save it — he embraced his task with an unnerving intensity.

Back then, he was everywhere, doing everything: comforting grieving families, hiring equity traders (the equity desk lost 20 of its 24 traders), asking for help from competitors to get into deals, writing eulogies for dead partners, going on CNBC to refute a report that the firm was going out of business, figuring out how to rebuild the computer systems, and on and on.

There was something so raw about him then, so fierce, as if his life truly depended on rebuilding Sandler O’Neill. I remember especially how openly emotional he could be. He would start talking about Mr. Sandler, who had been his mentor, or Mr. Quackenbush, his best friend forever, a man who helped him quit drinking in his 20’s — and his eyes would well up while his voice would start to crack. He always seemed on the verge of losing it. But he never did.

Five years later, Jimmy Dunne met me in his paneled office on Third Avenue and shook my hand. His hair was whiter than it used to be, and he’d gained a little weight. What was most apparent, though, was that the overpowering intensity that had characterized him after 9/11 had lifted.

Once we sat down, he immediately launched into a recitation about how much stronger the firm has become in recent years, with 255 employees, vastly improved research and a better mergers and acquisitions department. Though, he quickly added, things were more difficult this year because the “flat yield curve” was making trading profits tougher to come by.

I had to smile. So did he.

No one will ever accuse Jimmy Dunne of being the perfect boss. “He’s not always the most patient listener, and he can be brutally blunt,” said the firm’s co-chief operating officer, Michael Lacovara, who joined a few years ago. “And I think he believes he can do anybody’s job as well as they can do it themselves.” But, added Mr. Lacovara, “if on Sept. 12, 2001, he hadn’t felt that way, we wouldn’t be here today.” Mr. Dunne turned out to be the exact right person to lead Sandler O’Neill out of the abyss.

“What he did was a little akin to Rudy Giuliani,” said Marc Maltz, the managing partner of the Triad Consulting Group, which worked with the firm, providing both organizational and psychological assistance for two years after 9/11. “He made decisions that gave people confidence. Once Jimmy worked it through in the first 48 hours and concluded that the firm would rebuild, he gave it the kind of leadership that was necessary.”

There were two instinctive decisions he made in particular that would prove enormously beneficial over the long haul. First, he and several other surviving partners — who were also thrust into new leadership roles — made the snap decision that despite its crippled state, the firm would do right by the families of its deceased employees. It extended full benefits for five years for all the families. It set up a foundation to pay for the education of the 71 children who lost a parent who had worked at Sandler O’Neill. It offered years of psychological counseling not just to surviving employees but to family members of the deceased.

And in 2001, it paid out salaries and bonuses as if the employees were still alive and working. It also paid out the deceased partners’ capital to their families, even though that depleted the firm’s own capital. Indeed, as it completed deals or did trades in the latter part of 2001, it shared the proceeds with the families of deceased partners who had been working on those deals before 9/11.

These acts of generosity created a tremendous amount of good will for the firm. It motivated employees and caused clients and competitors and just about everyone else to rally around it. But that’s not why Mr. Dunne took that path. Lots of small firms like to say they’re a family, but at Sandler O’Neill it was actually true. “It really was a firm founded by friends who hired friends,” Mr. Maltz said. More than anything else, the culture of the place drove Mr. Dunne’s decision.

Mr. Dunne’s second decision, equally instinctive and heart-felt, was to cast the rebuilding of Sandler O’Neill in moral terms. Partly, Mr. Dunne used the “they can’t do this to us’’ rhetoric, and partly he made the case that rebuilding the firm was something the deceased would want the survivors to do. But just as important, it gave the living a way to connect with one another, to do something after 9/11 that felt purposeful and important. “The organization had such a deep sense of moral purpose,” marveled Mr. Maltz, who has written several papers about the underpinnings of Sandler O’Neill’s revival.

Karen Fishman, one of the 17 employees who got out of the south tower before it collapsed, said: “Work was a way to deal with what happened. You needed to be with people who experienced what you experienced. You didn’t want the firm to go away, because you needed it.”

As with many Sandler O’Neill survivors, Ms. Fishman was suddenly handed new responsibilities. She buried herself in her work, sometimes thinking, after a 12-hour day, that she hadn’t worked hard enough. But as the firm got stronger, those feelings lifted, and she began to feel instead that she should spend more time with her children. So in 2003, she left the firm. Time was passing. Time was healing.

Mr. Dunne believes that the decisions he and the other new leaders of the firm made back then gave them a confidence they hadn’t had before. And that also helped Sandler O’Neill become a bigger, stronger firm. “It was like we were in a cave, and we were making decisions without having any idea what other firms were doing,” he said. “And then we saw others doing the same things we did. Usually when you are a small firm, you wait to see what the big firms are going to do. But we didn’t wait for anyone’s lead. And I think that has given us the confidence to believe that there isn’t a piece of business in our niche that we shouldn’t compete for — and get.”

Today, of course, the number of employees hired since 9/11 vastly exceeds the number who were there that day. Still, I was astonished to discover that 74 of the 105 employees who worked for Sandler O’Neill on Sept. 12, 2001, are still there. But there’s not much of a gap anymore between the new people and the old ones, as there inevitably was for the first year or so. And for the most part, even the old-timers now view 9/11 as an event that has slowly receded into the past.

“I don’t need to go back there,” said William Hickey, who now helps run the firm’s M.& A. department. “I think about my friends all the time, but I don’t think about the event itself.”

Indeed, the person who probably dwells the most on 9/11 is Mr. Dunne himself. Over time, the firm took down from the walls the many letters of support and grief it had put up after 9/11; Mr. Dunne’s own collection came down last of all, and only at the urging of his sister, who told him that the time had come for him to do so.

But he hasn’t taken them all down. In his office, he has several framed letters, including one from Mr. Quackenbush’s brother, written shortly after the attack, urging him to rebuild the firm. Sandler O’Neill commissioned a sculpture with the names of the deceased employees, and placed it in the lobby of its office. But after a few years, some employees came to feel that it was too omnipresent a reminder of an event they were trying to move beyond. So Mr. Dunne had it moved to a small alcove just outside his own office, where he, at least, can see it every day.

Most of all, Mr. Dunne still feels a sense of moral purpose. It’s just a little different now. Whereas rebuilding was once a way of honoring his deceased partners, now he feels something else. “What are our responsibilities to all the people who helped us or took an interest in seeing us do well?” he said. “We got letters from a farmer in Iowa and a teacher in South Korea. They took the time to say that they respected what we were doing. I feel a large responsibility to the world for helping us survive.”

Not long ago, Mr. Dunne gathered his partners together and told them he wanted to extend the benefits to the families for another three years. Not a single one dissented.

Why did you do that? I asked him. “We did it because we feel fortunate,” he replied, “more fortunate than when we first did it five years ago. It just felt like the right thing to do.”

His voice suddenly cracked, just as it used to before the passage of time.

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